Ita/189/2012 Of The Federal Bank Ltd v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY, THE 18TH DAY OF DECEMBER 2018/27TH AGRAHAYANA, 1940 ITA. No.189 of 2012 AGAINST THE ORDER IN ITA NO.261/2009 OF THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH DATED 09-12-2011 APPELLANT: THE FEDERAL BANK LTD.FEDERAL TOWERS, ALUVA - 683 101. BY ADVS.SRI.V.ABRAHAM MARKOSSRI.BINU MATHEWSRI.B.J.JOHN PRAKASHSRI.MATHEWS K.UTHUPPACHANSRI.TERRY V.JAMESSRI.TOM THOMAS (KAKKUZHIYIL) RESPONDENT: THE ASSISTANT COMMISSIONER OF INCOME TAXCIRCLE-1 (2), ALUVA- 683 106. BY ADVS.SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES)SRI.JOSE JOSEPH SC FOR INCOME TAXSRI.P.K.R.MENONSR.COUNSEL GOITAXES THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.12.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT K. Vinod Chandran, J. The short question that arises forconsideration in the aforesaid appeal is as towhether the assessee is obliged to pay tax onthe fringe benefit, which was actually paid inthe subsequent assessment year. The assessmentorder coming up for consideration before us is2006-2007. The assessee had a superannuationfund for its employees, to which the assesseewas making contributions as the employer, inevery assessment year. In the subject assessmentyear, a portion of the contribution was paid tothe fund in the previous financial year relevantto the assessment year. The balance portion waspaid only in the subsequent financial year. Thequestion is as to whether the assessee has topay the tax on the entire contribution actuallypayable by the assessee in the assessment year. 2. The learned Senior Counsel appearing forthe assessee Bank would submit that the words ITA. No.189 of 2012 3 employed in the provision would indicate thattax would be leviable only when there is apayment actually made. It is also pointed outthat in the case of deduction, the Departmentwould not permit any provision to be allowed asa deduction. 3. The learned Standing Counsel, Government of India [Taxes], would contend that theassessee is maintaining accounts in themercantile system and the moment the liabilityaccrues, the tax is payable in so far as thefringe benefits under Chapter XIIH of the IncomeTax Act, 1961 is concerned. Section 43(2)defines paid as “means actually paid or incurredaccording to the method of accounting upon thebasis on which the profits and gains arecomputed under the head “Profits and gains ofbusiness or profession”. 4. The fringe benefit, which is taxableherein, is as spoken of under Section 115 WB (i)(c) 'any contribution by the employer to an ITA. No.189 of 2012 approved superannuation fundsforits employees'. Value of fringe benefits as spokenof under Section 115 WC (b) as it existed in thesubject assessment year is 'actual amount ofcontribution referred to in Clause (c) of sub-section (i) of Section 115 WB'. The valuationspecifically speaks of actual amount ofcontribution and not the paid up amounts. In such circumstances, we answer thequestion of law in favour of the Revenue andagainst the assessee. The appeal standsrejected, upholding the order of the Tribunal.There is no order as to costs. Sd/- K. VINOD CHANDRAN JUDGE Sd/- sp/19/12/18 ASHOK MENON JUDGE //True Copy// P.A. To Judge ITA. No.189 of 2012 PETITIONER'S EXHIBITS: APPENDIX ANNEXURE-ATRUE COPY OF ASSESSMENT ORDER DATED 05.12.2008 OF THE RESPONDENT ANNEXURE-BTRUE COPY OF APPELLATE ORDER DATED 16.03.2009 OF THE COMMISSIONER OFINCOME TAX, KOCHI.ANNEXURE-CTRUE COPY OF APPEAL DATED 30.04.2009 FILED BY THE APPELLANT BEFORE THE INCOME TAX APPELLATE TRIBUNAL, KOCHI.ANNEXURE-DCERTIFIED COPY OF ORDER DATED 09.12.2011 OFTHE INCOME TAX APPELLATE TRIBUNAL, KOCHI INI.T.A. NO.261/COCH/2009. RESPONDENT'S EXHIBITS:- NIL //TRUE COPY// P.A. TO JUDGE