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Monday, May 20, 2013

TDS not to be be deducted on expenditure on which assessee has paid FBT

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I.T.A. Nos.152 to 154, 156 to 158, 283 to 286 & 329 to 331 of 2012
A.Ys. 2006-07 to 08-09, 2006-07 to 08-09, 2006-07 to 09-10 & 2006- 07 to 08-09 respectively
Oil and Natural Gas Corporation Ltd. Vs The A.C.I.T.(TDS)
I.T.A.Nos.266 to 269, 297 to 299, 301 to 303 & 305 to 307 of 2012
A.Ys.2006-07 to 09-10, 2006-07 to 08-09, 2006-07 to 08-09 & 2006-07 to 08-09 respectively
The A.C.I.T.(TDS) V. Oil and Natural Gas Corporation Ltd.
Date of pronouncement : 11.01.2013
“During the period, when FBT was applicable, appellant considered reimbursements to employees under holiday home scheme to be liable to FBT under section 11 5WB(2)(G), i.e. expenditure for use of hotel, boarding and lodging facilities. During the FBT regime, expenditure borne or reimbursed by employer on traveling, accommodation and other items for holiday availed of by employee or any member of his family was prescribed as a fringe benefit for the purpose of section 1 7(2)(vi) by Rule 3(7)(ii), only in respect of those employers, who were not liable to pay fringe benefit tax under Chapter XII-H of the Act. Rule 3(7)(ii) was inserted as above through Income tax (Fourteenth Amendment) Rules, 2007 w.e.f. 1.4.2008. Thus, as far as A.Yrs.2008-09 and 2009-10 are concerned, appellant’s contention that the holiday home scheme could not be considered as perquisite u/s 1 7(2)(vi) in the hands of employees is acceptable. For A. Yrs. 2006-07 and 2007-08, since expenditure incurred by employers for holiday availed of by employees or their family members was not prescribed as a ‘fringe benefit’ for the purpose of section 17(2)(vi), it could not therefore be taxed as perquisite in employee’s hands. However, the payment received under holiday home scheme would be non taxable in employee’s hands only if it was actually and fully utilised towards hotel, boarding and lodging facilities, etc on a holiday availed by self or family member. If in any employee’s case, it is found that the payment in question was actually and/or fully not utilized towards holiday home scheme, it would constitute concerned employee’s taxable salary. As far as appellant is concerned, due to payment of FBT and due to holiday home reimbursement being not a prescribed ‘fringe benefit’ for the purpose of section 17(2)(vi) from A. Yrs. 2 006- 07 to 2009-10, appellant is not to be treated as assessee in default u/s 201(1) in this regard. For A. Y. 2010-11 also, appellant is not to be treated as assessee in default subject to verification by the ACIT(TDS) that tax at source has already been deducted from Holiday Home reimbursements

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