M/s. Theo Desh Consultants, Baroda v. The DCIT, Circle 2(2),, Baroda

ITA 1519/AHD/2013 | 2006-2007
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 151920514 RSA 2013
Assessee PAN AACFT3269Q
Bench Ahmedabad
Appeal Number ITA 1519/AHD/2013
Duration Of Justice 3 year(s) 4 month(s) 7 day(s)
Appellant M/s. Theo Desh Consultants, Baroda
Respondent The DCIT, Circle 2(2),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 30-09-2016
Date Of Final Hearing 17-08-2016
Next Hearing Date 17-08-2016
Assessment Year 2006-2007
Appeal Filed On 23-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER ./ ITA NO. 1519/AHD/2013 / ASSESSMENT YEAR : 2006-07 M/S. THEO DESH CONSULTANTS 82-83 3 RD FLOOR SURYA KIRAN COMPLEX OLD PADRA ROAD BARODA 390015 PAN: AACFT 3269 Q VS DCIT CIRCLE-2(2) BARODA / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SURENDRA MODIANI AR REVENUE BY : SHRI SATISH SOLANKI SR DR / DATE OF HEARING : 17/08/2016 / DATE OF PRONOUNCEMENT: 30/09/2016 / O R D E R THIS IS ASSESSEES APPEAL UNDER FRINGE BENEFIT ACT. FOLLOWING TWO GROUNDS ARE RAISED:- 1. REOPENING OF CASE U/S 115WG DUE TO AUDIT OBJECTION IS NOT JUSTIFIED IN LAW AND THE CASE SHOULD NOT HAVE BEEN REASSESSED. 2. THE LEARNED ASSESSING OFFICER HAS MADE AND THE LD. CIT(A) HAS CONFIRMED AN ADDITION TO THE VALUE OF FRINGE BENEFIT TO THE EXTE NT OF RS.3 29 656/- ON FIX REIMBURSEMENT OF FOOD CONSIDERING IT AS A HOSPITALI TY EXPENSE UNDER SECTION 115WB(2)(B) AND TO THE EXTENT OF RS.2 64 804/- ON T OURS AND TRAVELS. 3. LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE REA SONS RECORDED FOR RE- OPENING OF ASSESSMENT IN PARAGRAPH 2 WHICH READS A S UNDER:- ON VERIFICATION OF THE RECORDS IT WAS NOTICED THA T THE ASSESSEE HAS DECLARED TOTAL INCOME IN RESPECT OF FBT AT RS. 2 33 616/-. A SSESSEE HAS DEBITED RS.16 48 280/- ON ACCOUNT OF FRF (FIX-REIMB URSEMENT OF FOOD). SALARY DEBITED TO THE P & L ACCOUNT IS RS. 7 37 614/-. THU S FRF PAID EXCEEDED BY MORE THAN 200 PERCENT. THE AUDIT OBSERVED FROM THE ABOVE IT IS EVIDENT THAT PAYMENT OF FRF IS IN THE NATURE OF FRINGE BENEFIT THEREBY FBT OF RS.3 29 656/- (I.E. 20% OF RS.16 48 280/-) REMAINED TO TAKEN IN T O ACCOUNT OF FBT. IN VIEW OF ABOVE THE LIABILITY TO FBT ON THE FRF IS TO BE EXA MINED. THIS HAS RESULTED 30% OF RS.3 29 656/- TAX EFFECT OF RS.1 56 458/- IN CLUDING INTEREST U/S 115 WS(1) OF THE ACT. SMC-ITA NO. 1519/AHD/2013 \ THEO DESH CONSULTANTS VS. DCIT AY : 2006-07 2 IT IS PLEADED THAT THE ENTIRE BASIS FOR RE-OPENING OF ASSESSMENT IS NOT IN MATERIAL OR INFORMATION GATHERED BY LD. AO BUT THE OPINION EXPRESSED BY THE INTERNAL AUDIT PARTY. RELIANCE IS PLACED ON HO NBLE SUPREME COURT JUDGMENT IN THE CASE OF INDIAN AND EASTERN NEWSPAPE R SOCIETY VS. CIT REPORTED IN [1979] 119 ITR 996 (SC) HOLDING AS UN DER:- 20. THEREFORE WHETHER CONSIDERED ON THE BASIS TH AT THE NATURE AND SCOPE OF THE FUNCTIONS OF THE INTERNAL AUDIT ORGANIZATION OF THE INCOME-TAX DEPARTMENT ARE CO-EXTENSIVE THAT THAT OF RECEIPT AU DIT OR ON THE BASIS OF THE PROVISIONS SPECIFICALLY DETAILING ITS FUNCTIONS IN THE INTERNAL AUDIT MANUAL VOL.2 WE HOLD THAT THE OPINION OF AN INTERNAL AUDI T PARTY OF THE INCOME-TAX DEPARTMENT ON A POINT OF LAW CANNOT BE REGARDED AS INFORMATION WITHIN THE MEANING OF SECTION 147(B) OF THE INCOME-TAX ACT 1961. 21. THE QUESTION REFERRED BY THE ITAT IS ANSWERED I N THE NEGATIVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE THE ASSESS EE IS ENTITLED TO ONE SET OF COSTS IN THESE APPEALS. 4. ON MERIT ALSO IT IS CONTENDED THAT THE ABOVE AM OUNTS CANNOT BE SUBJECTED TO FRINGE BENEFIT TAX (FBT) IN VIEW OF CB DT CIRCULAR. RELIANCE PLACED ON WRITTEN SUBMISSIONS FILED IN THIS BEHALF. 5. LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES B ELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES. IT CLEARLY EMERGES FROM THE RECORD THAT THE IMPUGNED FBT ASSES SMENT WAS REOPENED U/S 115WG CONSEQUENT TO THE OPINION EXPRESSED BY TH E INTERNAL AUDIT PARTY. RESPECTFULLY FOLLOWING THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY (SUPRA) THIS CANNOT BE A VALID BASIS FOR REOPENING OF AN ASSESSMENT. IN VIEW THER EOF THE REOPENING OF THE ASSESSMENT IS HELD TO BE BAD IN LAW AND THE PROCEED INGS ARE ACCORDINGLY SMC-ITA NO. 1519/AHD/2013 \ THEO DESH CONSULTANTS VS. DCIT AY : 2006-07 3 QUASHED. SINCE THE REOPENING ITSELF IS BAD IN LAW THERE IS NO NEED TO CONSIDER THE MERITS OF THE ISSUE AND THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 30 TH SEPTEMBER 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 30/09/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. / DR ITAT AHMEDABAD 6. / GUARD FILE . / BY ORDER TRUE COPY / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD