Fringe Benefit Tax - Apex Court solved the confusion relating to applicability of sub-sections (1), (2) and (3) of Section 115WB

Fringe Benefit Tax - Apex Court solved the confusion relating toapplicability of sub-sections (1), (2) and (3) of Section 115WB
Since the inception (as Introduced by Finance Act, 2005, w.e.f.1-4-2006) of the concept of fringe benefit tax in Income Tax, therewas wide confusion and ambiguity over applicability of provisionssub-sections (1), (2) and (3) of 115WB of the Act.
Sub-section (1) of 115WB defines the meaning of the term "fringe benefit".
Sub-section (2) of 115WB prescribes that any expenses incurred orpayment made for the purposes mentioned in clause (A) to clause (Q)shall be deemed to have been provided by the employer to hisemployees.
Sub-section (3) excludes the followings from the purview of FBT:
(a) perquisites in respect of which tax is paid or payable by the employee.
(b) any benefit or amenity in the nature of free or subsidisedtransport or any such allowance provided by the employer to hisemployees for journeys by the employees from their residence to theplace of work or such place of work to the place of residence
Whereas the section 115WA is a charging Section
In view of this, the following doubts / ambiguities have been clearedby the Honorable Supreme Court:
1. Whether exemption provided in sub-section (3) is includedinto sub-section (1) or sub-section (2).
Held: We, therefore, are of the opinion that AAR was right in itsopinion that the matters enumerated in sub-section (2) of Section115WB are not covered by sub-section (3) thereof, and the amenity inthe nature of free or subsidized transport is covered by sub-section(1).
2. Whether the provisions of FBT are restricted to employeeshaving residence in India
Held: The statute does not say so. Fringe benefit tax being a tax onexpenditure; the only concern of the revenue where for should be as towhether such expenditure has been made. Appellant has a permanentestablishment in India. It pays income-tax in India. It carries onbusiness in India. It has for the purpose of carrying out itsbusiness activities engaged persons from within India or outsideIndia. If it makes any expenditure for bringing any employee fromabroad, the same would also liable to be taken into consideration forthe purpose of sub-section (1) of Section 115WB.
3. Scope and power of CBDT while interpreting the statutoryprovisions (Circular No. : 8/2005, DATED 29-8-2005)
Held: CBDT has the requisite jurisdiction to interpret the provisionsof Income-tax Act. The interpretation of CBDT being in the realm ofexecutive construction, should ordinarily be held to be binding, saveand except where it violates any provisions of law or is contrary toany judgment rendered by the courts.
4. The question as to whether the nature of a travellingexpenditure incurred by the appellant would attract the benefitssought to be granted by the statute did not and could not fall forconsideration of the AAR.
Held: Whether the payments were made to them on a regular basis orwhether the expenditures incurred which strictly come within thepurview of Section 115WB or not must, therefore, be answered havingregard to the materials placed on records. If any question arises asto whether the agreement entered into by and between the appellant andthe employees concerned would attract, in given cases, the liabilityunder FBT benefit tax would have, thus, to be determined by theassessing authority.