LexR & B FALCON (A) PVT. LTD. versus COMMISSIONER OF INCOME TAX
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[2008] 7 S.C.R. 804 I ;.... A R & B FALCON (A) PVT. LTD. v. COMMISSIONER OF INCOME TAX (Civil Appeal No. 3326 of 2008) B MAY 6, 2008 [S.B. SINHA AND V.S. SIRPURKAR, JJ.] ""- Income Tax Act, 1961 - s. 115 WB - Fringe Benefit Tax - Levy of - On Assessee-Company providing transportation c to off-shore employees from their residence and home countries outside India to the place of Rig and back-Authority of Advance Ruling (AAR) opining that exemption provided under sub~section (3) does not cover the matters enumerated in sub-section (2) but those enumerated under sub-"section D (1 ); and that 'residence' within meaning of the provision would mean residence in India - On the basis of opinion AAR also holding the assessee-Company liable to pay the tax as the nature of the travelling expenditure incurred by it did not attract the provision of exemption - On appeal, held: AAR was right E in opining that matters enumerated in sub-section (2) are not covered by sub-section (3), but it was wrong in opining that 'residence' could mean residence in India - However, AAR could not have decided the liability of the assessee to pay the tax by determining the nature of the travelling expenditure incurred by it as the issue was not referred for its opinion - 'F The question can be decided by the Assessing Authority -...- Appellant entered into a contract for supplying Mobile Off-shore Drilling Rig (MOOR) alongwith equipment and offshore crew on charter hire basis with a public G sector undertaking. It filed an application before Authority of Advance Ruling (AAR) on the question whether transportation cost incurred by the petitioner in providing ' ... transportation facility for movement of off-shore .... employees from their residence in home country to the place of work ~nd back is liable to Fringe Benefit Tax as H 804 ,_ R & B FALCON (A) PVT. LTD. v. COMMISSIONER OF 805 INCOME TAX provided under s. 115 WB of Income Tax Act, 1961. AAR A opined that matters enumerated in sub-section (2) of s. 115 WB were not covered by sub-section (3) thereof, providing exemption and the amenity in the nature of free or subsidized transport was covered by sub-section (1 ); and that 'Residence' within the meaning of the said B provision would mean residence in India and since the employees concerned were residents of countries outside India, sub-section (3) of s. 115 WB was not applicable. It held that the appellant-company was liable to pay the Fringe Benefit Tax for providing transportation C to off-shore employees from their residence and home countries outside India to the place of Rig and back. Hence the present appeal. Partly allowing the appeal, the Court HELD: 1.1 The authority of Advance Ruling (AAR) 0 was right in its opinion that the matters enumerated in sub-section (2) of Section 115WB of Income Tax Act, 1961 are not covered by sub-section (3) thereof, and the amenity in the nature of free or subsidized transport is covered by sub-section (1). [Para 19) [823-8) E 1.2. Sub-section (1) of Section 115WB contains the interpretation section. It is in two parts. It provides for a direct meaning, as also an expanded meaning. Expanded meaning of the said provision is contained in sub-section F (2). Whereas sub-section (1) takes within its sweep any consideration for employment, inter alia, by way of privilege service, facility or amenity directly or indirectly, sub-section (2) thereof expands the said definition stating as to when the fringe benefit would be deemed to have G been provided. The expansive meaning of the said term 'benefits' by reason of a legal fiction created also brings within its purview, benefits which would be deemed to have been provided by the employer to his employees during the previous year. Indisputably, sub-section (3) H 806 SUPREME COURT REPORTS (2008] 7 S.C.R. A refers to sub-section (1) only. Ex facie, it does not have any application in regard to the matters which have been brought within the purview of the fringe benefit tax by reason of application of the deeming provision. [Para B 13) [819-F-H; 820-A-B] 1.3 Sub-sections (1) and (2), having regard to the provisions of Section 115WA as also sub-section (3) of Section 115WB, must be held to be operating in different fields. [Para 14) [820-G] c 1.4 In the instant case, the employer incurs the said expenditure as of necessity. It, therefore, clearly falls within the purview
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