INCOME TAX ACT, 1961

Section 115WB(2)(F)

Fringe benefit tax under section 115WB(2)(F) - Leviability - Visa charges incurred to make the employees eligible to undertake an entry to foreign country and stay at the work place in that country -

Assessee had incurred expenditure on visa charges. Issue was as to whether expenses incurred towards visa charges and others were liable for fringe benefit tax. Case of revenue was that expenses incurred towards visa charges and others were liable for fringe benefit tax as the same was legitimate business expenditure, when the provisions of section 115WB contemplates levy of surcharge in respect of expenditure incurred towards employees during course of business. Held: The expenditure on visa and other related expenditure were incurred by the employer to send its employees to the work place abroad for the purposes of business for scientific tenures and not to move around the country for sight seeing. Expenditure under the head 'tours and travels' is normally recurring in nature but, in instant case, the employees of the assessee did not take frequent tours and travels. The expenses were incurred for visa charges to make the employees eligible to undertake an entry to foreign country and stay at the work place in that country. Expenditure was incurred for business necessity and not for providing any domestic benefit or amenity to the employee. The payment for visa and other charges were statutory obligations and fringe benefit tax could not be levied.

REFERRED : R & B Falcon (A) (P) Ltd. v. CIT (2008) 301 ITR 309 (SC) : 2008 TaxPub(DT) 1990 (SC), K.P. Varghese v. ITO & Anr. (1981) 7 Taxman 13 (SC) : 1981 TaxPub(DT) 972 (SC) and Gujarat Chamber of Commerce and Industry v. UOI (2017) 395 ITR 457 (Guj-HC) : 2017 TaxPub(DT) 1517 (Guj-HC)

FAVOUR : In assessee's favour.

A.Y. : 2006-07

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