The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) while granting relief to Sony India the bench held that liability does not arise since failure to demand notice with respect to interest component of Fringe Benefit Tax ( FBT ).
The assessee Sony India Pvt. Ltd. is a resident corporate entity.After filing the return of income assessee case was selected for scrutiny. Return of income was processed under section 143(1) of Income Tax Act accepting the returned income and determining refund due of Rs.7,59,49,760/-
However, out of the said refund due, an amount of Rs.1,83,69,090/- was adjusted, which comprised of an amount of Rs.91,84,590/- being outstanding Fringe Benefit Tax ( FBT ) demand under section 115WE of the Income Tax Act for the assessment year 2009-10 created on 04.01.2011 and interest under section 220(2) thereon amounting to Rs.91,84,500/- i.e. up to the date of processing of the return on 26.05.2019.
Aggrieved with the adjustment of refund in the intimation issued under section 143(1) of the Income Tax Act, the assessee preferred an appeal before learned first appellate authority.
Assesee representative, Gaurav Singhal argued that as per provision to section 115WE of the Act, no intimation can be issued after expiry of one year from the end of financial year in which the return is made. Hence since, the intimation under section 115WE(1)(d) of the Income Tax Act was sent after expiry of one year, it is barred by limitation.
Further counsel for assessee argued that intimation under section 115WE(1) of the Income Tax Act was never communicated to the assessee along with the demand notice.
Vizay B. Vasanta, the Department representative argued that the assessee was very much aware of the FBT demand including the interest component, which was uploaded in the Income Tax Department portal.
Further argued that assessee had access to the Income Tax Department portal and was aware of the demand created against him. Thus, he submitted, there is no substance in the claim of the assessee that he had not received any intimation regarding the demand.
The tribunal during the adjudication observed that in respect of its tax liability for assessment year 2009-10, both income tax and FBT, the assessee, along with the return of income filed for assessment year 2009-10, had paid both income tax and FBT through challan.
However, while processing the return of income, the entire amount of Rs.8,10,00,000/- was adjusted against the income tax liability, thereby, creating liability of FBT demand of Rs.73,45,724/- along with interest charged of Rs.18,38,871/- under section 115WJ of the Income Tax Act.
Therefore the two-member bench of G.S. Pannu, ( Vice President ) and Saktijit Dey, ( Vice President ) observed that there cannot be a levy of interest under section 220(2) of the Income Tax Act for alleged non-payment of FBT liability.
Furthermore, the records reveal that once the assessee came to know the fact that the demand relating to FBT liability was appearing in the portal of the Income Tax Department, it had opened a communication channel with the Assessing Officer continuously seeking information regarding service of intimation and demand notice creating such liability.
The bench also observed that Revenue has failed to furnish any material before them , which can establish that the intimation and demand notice concerning FBT demand was ever served on the assessee.
Thus the bench directed the Assessing Officer to delete the demand and refund the amount adjusted against the refund due for the impugned assessment year.
Accordingly the bench allowed the appeal filed by the assessee.
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