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Judgment
This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act), challenges the common order dated 19th June, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal)for the Assessment Years 2006-07, 2007-08 and 2008-09.
In all these appeals, Revenue urges the following common questions of law for our consideration:
"(1) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in directing the Assessing Officer to exclude the value of Fringe Benefit declared by the assessee itself in its original as well as revised return of Fringe Benefit Tax filed u/s. 115W of the Income Tax Act, 1961 although all the material facts were available with the assessee at time of filling of these returns?
(2) Whether on the facts and in the circumstance of the case and in law, the Tribunal was right in granting relief of Fringe Benefit Tax on expenses incurred on (i) non-employees and (ii) gift to non-employees, in total disregard to the provisions laid in clause (A) to (P) of Sub-section (2) of Section 115WB of the Income Tax Act?
(3) Whether on the facts and in the circumstance of the case and in law, the Tribunal was right in granting relief of Fringe Benefit Tax on expenses incurred on (i) medical reimbursement/expenses of employees and their families, (ii) education facilities merely on surmises and conjectures, without there being anything on record in support of the finding of the ITAT that these perquisites were taxed in the hands of the employees or not and, therefore, this tantamount to perverse finding of fact?
(4) Whether on the facts and in the circumstance of the case and in law, the Tribunal was right in granting relief of Fringe Benefit Tax on expenses incurred on Salary of drivers/pilots in total disregard to the provision laid in clause (A) to (P) of Sub-section (2) of Section 15WB of the Income Tax Act?
(5) Whether on the facts and in the circumstance of the case and in law, the Tribunal was right in granting relief of Fringe Benefit Tax on expenses incurred on insurance premium for motor car/aircraft by relying on the decision of the Hon''ble Calcutta High Court in the case CIT v. Tungabhadra Industries Ltd. 207 ITR 533, without appreciating the fact the same was rendered in connection with allowability of deduction u/s. 37(3A) of the Income Tax Act, 1961 when Fringe Benefit Tax was not brought on Statute?
(6) Whether on the facts and in the circumstance of the case and in law, the Tribunal was right in granting relief of Fringe Benefit Tax on expenses incurred on preoperative expenses stating that they are capital in nature on which depreciation is allowable merely on surmises and conjectures, without there being anything on record in support of the finding of the ITAT that expenditures have been incurred on capital asset on which depreciation is allowable and, therefore, this tantamount to perverse finding on fact?
(7) Whether on the facts and in the circumstance of the case and in law, the Tribunal was right in granting relief of Fringe Benefit Tax on maintenance of accommodation not in the nature of guest house in total disregard to the provision laid in clause (A) to (P) of Sub-section (2) of Section 115WB of the Income Tax Act?".
Regarding Question 1:--
"(a) We note that the Appellant had voluntarily filed its return of Fringe Benefit under Section 115(WD) of the Act. In its Return of Fringe Benefit, the Appellant had valued the Fringe Benefit and offered tax on the expenses incurred. However, in its return of Fringe Benefit, the Appellant had appended a note, indicating that according to it, no Fringe Benefit tax on the amounts offered is payable. However, the same is being filed by way of abundant caution. The Assessing Officer after recording the fact of implied protest dealt with the various amounts returned by the Appellant in its Fringe Benefit Returns. However, by order dated 26th December, 2008, on merits, held that the tax is payable;
(b) In appeal, the CIT(A) did not allow the Respondent-Assessee to urge that no Fringe Benefit Tax in fact is payable. This on the ground that as the Respondent-Assessee had not claimed the benefit in its Return, it cannot raise the issue in appeal. This by relying on decision of the Apex Court in Goetze (India) Ltd. v. CIT , 284 ITR 323. Thereafter, the CIT(A) in his order dated 28th March, 2011 dealt with each of the submissions on merits and negated the same;
(c) On further appeal by the Respondent-Assessee to the Tribunal, the Respondent-Assessee defended the order of the CIT(A) inter alia on the ground that it is not open to the Respondent-Assessee to urge issue of non chargeability to Fringe Benefit Tax in appeal. This is so, as it had itself voluntarily filed its Return of Fringe Benefit before the Assessing Officer. The Tribunal by the impugned order dated 19th June, 2013, did not accept the Revenue''s contention by placing reliance upon the order of this Court in CIT v. Pruthvi Brokers and Shareholders P. Ltd. , 336 ITR 349 to hold that even if a claim of deduction/expenditure is not raised before the Assessing Officer, it can be raised in appeal. This by recording that in Goetze (supra) has itself noted that it does not in any manner, restrict the power of the Tribunal to deal with claims not made before the Assessing Officer;
(d) Mr. Suresh Kumar, learned Counsel appearing for the Revenue urges that the decision of this Court in Pruthvi Brokers (supra) is not applicable in this case. This for the reason that the claim of Fringe Benefit Tax being payable is given up in having filed its Return;
(e) In our view in all cases where a deduction/exemption is not claimed by an assessee before the Assessing Officer would normally amount to giving up the claim with regard to it. Nevertheless, this Court has held in Pruthvi Builders (supra) it could be raised in appeal. Moreover, in the present facts, the claim had already been made by the Respondent in its Return of Fringe Benefit by way of note therein. Thus, it is not a new claim. In any case, on account of the decision of this Court in Pruthvi Brokers and Shareholders (supra), the Respondent-Assessee is well entitled to raise the claim before the Appellate Authority even it not raised before the Assessing Officer;
(f) In the above circumstances, the Question 1 does not give rise to any substantial question of law. Hence not entertained."
Regarding Question (2):--
"The impugned order of the Tribunal allowed relief of Fringe Benefit Tax levied on expenses incurred as non-employees and gifts given to non-employees by following its order in CIT v. Tata Consultancy Services Ltd. (ITA/3457/MUM/2011 - rendered on 26th September, 2012) to hold that the relationship of employer and employee is a sine-qua-non of levy of Fringe Benefit Tax. The decision of the Tribunal in Tata Consultancy Services (supra) was carried in appeal to this Court by the Revenue being Income Tax Appeal No. 1132 of 2013. The aforesaid appeal of the Revenue in the case of Tata Consequently Services was dismissed on 24th March, 2015. Thus, confirming the decision of the Tribunal in the case of Tata Consultancy Services (supra). No distinction has been shown to us which would warrant a different view. In the above view, Question (2) as framed does not give rise to any substantial question of law. Thus not entertained."
Regarding Question (3):--
"(a) The impugned order of the Tribunal has held that in respect of medical reimbursement, medical facilities and education facilities made available to its employees, is taxable in the hands of its employees. Therefore, out side the scope of Fringe Benefit Tax;
(b) At the hearing before the Tribunal, the learned Counsel appearing for the Respondent-Assessee had specifically stated that the aforesaid facilities are liable to tax as perquisites in the hands of employees/individuals. This is not disputed. Even today, nothing has been shown to us from the record that the statement made by Counsel for the Respondent-Assessee before the Tribunal is not correct. In case, the statement made by the Counsel appearing on behalf of the Respondent-Assessee before the Tribunal is not correct and is so found by the Revenue, the remedy, if any, is to move the Tribunal."
Accordingly, the question as framed does not give rise to any substantial question of law. Hence, dismissed.
Regarding Question (6):--
"(a) Mr. Suresh Kumar, learned Counsel appearing for the Revenue submits that there is nothing on record to indicate that the preoperative expenditure which has been excluded from the value of Fringe Benefit Tax was a capital expenditure. We find that before the Assessing Officer, the Respondent-Assessee had relied upon the CBDT Circular No. 8 of 2005 dated 29th August, 2005 and in particular, question 89 therein. Further, while relying upon the same, the Respondent-Assessee had submitted that capital expenditure on any capital assets would not fall within the scope of Section 115 (W)(2) of the Act.
(b) The Assessing Officer without dealing with their submissions held that the same is taxable as Fringe Benefit on account being pre-operative expenses. We find that the impugned order has rendered a finding of fact that the expenses have been claimed as capital expenditure. The same was not disputed before the Tribunal or before us. In the above view, reliance placed by the impugned order upon answer to question 89 in CBDT Circular No. 8 of 2005 cannot be faulted.
(c) Accordingly, in the present facts, the question does not give rise to any substantial question of law. Hence, not entertained."
Appeal admitted on Question Nos. 4, 5 and 7.
Registry is directed to communicate copy of this order to the Tribunal. This would enable the Tribunal to keep papers and proceedings relating to the present appeal available, to be produced when sought for by the Court.