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2014 DIGILAW 682 (GUJ)

COMMISSIONER OF INCOME TAX v. UTI BANK LIMITED

2014-06-23

K.J.THAKER, M.R.SHAH

body2014
ORDER M.R. SHAH, J. 1.00. Feeling aggrieved and dissatisfied with the impugned judgement and order dated 10/9/2013 passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as “the Tribunal”) in ITA No.790/Ahd/2012 for the AY 2007-2008, revenue has preferred the present Tax Appeal to consider the following proposed substantial question of law :- “[A] Whether the Appellate Tribunal has substantially erred in quashing the order u/s 263 on the ground that the assessment order was not erroneous and prejudicial to the interest of the revenue? [B] The appellate Tribunal has not appreciated the fact that the assessee had contributed Rs.9.14 crores to approved Superannuation Fund which was required to be treated as Fridge Benefit u/s 115WB(1)(c) but the assessee had only disclosed Rs.22.36 lacs in the FBT return?” 2.00. That the assessee Bank filed its return of income of Fringe Benefit for the AY 2007-2008 declaring total value of Fringe Benefit of Rs.16,47,56,033/-. That the case was selected for scrutiny and thereafter assessment was framed under section 115WE(3) vide order dated 21/12/2009 determining the chargeable Fringe Benefits at Rs.16,47,56,033/-. Later, on verification of the assessment record and from the annual accounts for the year ended 31/3/2007, the Commissioner noted that the assessee had contributed Rs.9.14 Crores approximately to approved superannuation fund but in the return of Fringe Benefit Tax it had shown only Rs.22,36,132/-as “contribution towards approved superannuation fund for the employees” and therefore, the Commissioner was of the view that under section 115W(1)(c) of the Act, any contribution by the employer to any superannuation fund for the employees attract levy of fringe benefit tax on 100% of such contribution. He was thus, of the view that the AO had not made any addition to Fringe Benefit Tax and therefore, Rs.8,91,31,247/-has escaped assessment resulting into short levy of Fringe Benefit Tax along with interest to the tune of Rs.3,99,01,995/-and therefore, the Commissioner was of the view that the order passed by the AO was erroneous and prejudicial to the interest of the revenue and therefore, in exercise of powers under section 263 of the Act, the learned CIT(A) issued show cause notice upon the assessee and the same was replied by the assessee. However, the learned Commissioner did not accept the submission made on behalf of the assessee and passed order dated 5/1/2012 and found that amount of Rs.8,91,31,247/-has escaped assessment resulting into short levy of Fringe Benefit Tax along with interest to the tune of Rs.3,99,01,995/-, aggregating to Rs.3,99,01,995/-. That being aggrieved by and dissatisfied with the order passed by the learned Commissioner dated 5/1/2012, passed in exercise of powers under section 263 of the Act, the assessee preferred appeal before the learned tribunal being ITA No.790 of 2012 for the AY 2007-08 and after considering the provisions of section 115WC and section 115WC, the learned tribunal has allowed the said appeal and has quashed and set aside the order passed by the learned Commissioner passed under section 263 of the Act, by observing in para 55 and 56 as under :- “55. On reading the relevant provisions of section 115WB and 115WC it can be seen that the value of contribution by an employer to an approved superannuation fund for the employees in excess of Rs.one lac in respect of each employee is chargeable to FBT. Before us the Ld.A.R. Has placed on record the total contribution in superannuation fund to be Rs.9,13,67,379 which includes list of 29 employees where the contribution in superannuation fund was more than Rs.1 lac and their aggregate amount was Rs.51,36,132. From the aforesaid amount, the Assessee had reduced Rs.29 lacs, being the exemption limit in respect of 29 employees (the contribution was in excess of Rs.1 lac each) and the balance of Rs.22,36,132 was considered as taxable FBT. Before us, the Revenue could not controvert the submissions made by the Ld.A.R. Nor could point out any mistake in the calculation of FBT. 56. In the case of Malabar Industries Co. Vs. CIT (supra) the Hon’ble Apex Court has held that CIT has to be satisfied of twin conditions, namely (I) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue so as to invoke the provisions of s.263. If one of them is absent if the order of the ITO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be hand to s.263(1). If one of them is absent if the order of the ITO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be hand to s.263(1). In the present case, the Revenue could not point out any error in the calculation of working of FBT and therefore the order of AO which is sought to be revised cannot be considered to be erroneous and therefore, the provisions of s.263 could not be invoked in the present case. We therefore quash the order of CIT. Thus this ground of the Assessee is allowed.” 3.00. Feeling aggrieved by and dissatisfied with the order passed by the learned tribunal, the revenue has preferred the present Tax Appeal. 4.00. We have heard Mr.Manish Bhatt, learned counsel appearing on behalf of the revenue and Mr. R.K. Patel, learned advocate appearing on behalf assessee, who is on Caveat. We have perused the order passed by the learned Commissioner under section 263 of the Act as well as the impugned judgement and order passed by the learned tribunal. From the order passed by the learned tribunal, it appears that out of the total amount of Rs.9,13,67,379/-, which includes list of 29 employees where the contribution in superannuation fund was more than Rs.1 lac and their aggregate amount was Rs.51,36,132/-and from the aforesaid amount, the assessee had reduced Rs.29 Lacs being the exemption limit in respect of 29 employees (the contribution was in excess of Rs.1 Lac each) and the balance of Rs.22,36,132/-was considered as taxable Fringe Benefit Tax. As per Section 115WC for the purpose of said Chapter, the value of the fringe benefits shall be the aggregate of amount of contribution referred to in clause (c) of section 115WB which exceeds Rs.1 Lac in respect of each employee. 5.00. Considering the above when Rs.22,36,132/-was considered as taxable (the contribution with respect to 29 employees to the extent in excess of Rs.1 Lac each), the learned tribunal has rightly held that there was no calculation mistake in the calculation of the Fringe Benefit Tax. 6.00. Even on facts also the learned tribunal has held that the Commissioner was not justified in exercising the powers under section 263 of the Act. 7.00. 6.00. Even on facts also the learned tribunal has held that the Commissioner was not justified in exercising the powers under section 263 of the Act. 7.00. We are in complete agreement with the view taken by the learned tribunal more particularly the findings recorded by the learned tribunal in para 55 and 56. 8.00. In view of the above, we see no reason to interfere with the impugned judgement and order passed by the learned tribunal. Consequently, the proposed question of law are held in favour of the assessee and against the revenue. Consequently, present appeal deserves to be dismissed and is accordingly dismissed.