Employee Welfare Expenses cannot be included in Fringe Benefits Tax: ITAT [Read Order]

The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has held that the Employee Welfare expenses cannot be included in the value of Fringe Benefits Tax under the provisions of the Income Tax Act, 1961.

The assessee, Bilfinger Neo Structo Pvt. Ltd filed E-return of Fringe Benefit on 27.09.2007 showing the total value of fringe benefit at Rs.24,48,731/- . After taking cognizance of the submissions of the assessee the Assessing Officer completed the assessment under Section 115WE(3) on 12.12.2008 on the total value of Fringe Benefit of Rs.16,82,781/-. The Assessing Officer further made addition on account of Employees Gratuity/Pension fund amounting to Rs.33,82,334/-, Festival Expenses, Gifts and Pooja Expenses amounting to Rs.10,12,365/-, Repair & Maintenance and Motor Car including depreciation amounting to Rs.4,79,076/- and the Travel Expenses amounting to Rs.1,06,108/- as well as Employees Welfare Expenses amounting Rs.12,86,704/-.

The assessee claimed that the details were properly filed before the Assessing Officer which were never taken into account by the CIT(A) as well as Assessing Officer. The assessee further submitted that the margin of expenses are in nature of Hotel Expenses, Advertisement Expenses, Hotel Stay and Food Expenses, Guest House Expenses and the same was given to the Assessing Officer with the documents and hence the same should not have been included in Fringe Benefit Tax.

A division bench of the Tribunal comprising Shri P.M. Jagtap, Vice President and Ms. Suchitra Kamble, Judicial Member observed that “we have heard both the parties and perused all the relevant material available on record. The details which were given by the assessee before the Assessing Office as well as before the CIT(A) and from the perusal of the records produced before us shows that the same are related to the Employee Welfare expenses and cannot be included in the value of Fringe Benefit Tax. The details were totally discarded by the Assessing Officer as well as the CIT(A).”

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