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TMI Blog2024 (6) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... l as against 20% adopted by the Revenue? - HELD THAT:- In the present case there is no dispute that the assessee is engaged in the business of execution of works contracts for building / construction of ships and offshore platforms. While filing the fringe benefit statement along with the audit report in Form-3CD for the year under consideration the assessee had admitted the fringe benefits @ 5% under the head Conveyance, Tour Travel . The contention of the Revenue is that since the assessee s business is ship building / construction and not construction business per se, therefore the assessee is required to compute its fringe benefits @ 20% instead of 5% as was done by the assessee. Circular No.8/2005, dated 29/08/2005 wherein vide answer to Q. No. 106 of the Frequently Asked Questions at Item No. 11 explained the term business of construction clarified that the term business of construction must be understood by giving the ordinary English language meaning to it. In the instant case, there is no dispute on the fact that the assessee is involved in ship building / construction and therefore it is within the definition of the term business of construction . English language meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the assessee's business is ship building / construction and not construction business per se, therefore the assessee is required to compute its fringe benefits @ 20% instead of 5% as was done by the assessee. Further, the Ld. AO also observed that the assessee has made short admission of fringe benefits to the tune of Rs. 31,89,438/- for which details were not in the record available before the Ld. AO. Therefore, the Ld. AO reopened the case and a notice u/s. 115WH was issued on 24/09/2012 considering that there was an element of fringe benefits having escaped assessment. In reply, the assessee submitted its response stating that the original return filed in respect of fringe benefits may be treated as a return in response to the reassessment proceedings u/s. 115WH of the Act. Accordingly, the Ld. AO issued a notice u/s. 115WE(2) of the Act and in reply the assessee's Representative appeared before the Ld. AO and furnished the information from time to time. Before the Ld. AO, it was the contention of the assessee that the assessee is engaged in the business of construction of ships which is nothing but a form of construction business. The assessee also referred to Q. No. 106 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal: "1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld. CIT(A) is not justified in sustaining the addition of Rs. 14,29,432/- made by the AO by estimating the taxable fringe benefit value @ 20% as against 5% admitted by the appellant in respect of conveyance, tour and travel. 3. Any other grounds may be urged at the time of hearing." 5. At the outset, the Ld. Authorized Representative [AR] submitted that the assessee is engaged in the business of construction of ships which is nothing but a form of construction business. The assessee also referred to the Board Circular No.8/2005, dated 29/08/2005 and drew our attention to Q. No. 106 of the Frequently asked questions at item No. 11 of the said Circular, wherein it was stated the term "business of construction" must be understood by giving the ordinary English language meaning to it and therefore it was argued that all the activities involving construction including ship building / construction would be covered within the scope of the term 'business of construction' referred to in section 115WC(2) of the Act. Therefore, the Ld. AR pleaded that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer the Circular No.8/2005, dated 29/08/2005 wherein vide answer to Q. No. 106 of the Frequently Asked Questions at Item No. 11 explained the term "business of construction" which reads as under: "What is the meaning of the term business of construction - whether only civil construction or even other construction work like construction of plants, telecommunication, infrastructure, etc., are also covered?" "106. The term "business of construction" must be understood by giving the ordinary English Language meaning to the words. Hence, all activities involving construction would be covered within the scope of the term 'business of construction' referred to in section 115WC of the Income Tax Act." 8. In the above said Circular it was clarified that the term "business of construction" must be understood by giving the ordinary English language meaning to it. In the instant case, there is no dispute on the fact that the assessee is involved in ship building / construction and therefore it is within the definition of the term "business of construction". Further, for understating purpose, the ordinary English language meaning of the words "construct" and "construction" is extracted f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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