03 November 2007
1. The company is under the construction of fashion city project all the preliminary expenses are capitalised as capital work in progress.It does not have profit and loss account. now can the benefits provided to employees are liable for FBT ?
2. Can share application money used for meeting the expenses ?
3. Today am receiving input service after 5-6 years i will be providing output service. so can it be set off after 5-6 years ?
4.when does the company has to start contributing towards PPF,ESI ?
5.For one of the client i have deducted tax amounted to RS.10,00,000 (on credit basis)after receiving the bill. but still not made the payment to the party. now i dont have sufficient fund to remitt Rs.10,00,000
03 November 2007
sampat jain sir 1.NO there is no profit and loss account. the practical situation i came accross where the copmany is not paying FBT. what would be the reason ?
2.NO. other chartered accountant says it can not be used.
115WB. (1) For the purposes of this Chapter, “fringe benefits” means any consideration for employment provided by way of—
(a) any privilege, service, facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise, to his employees (including former employee or employees);
(b) any free or concessional ticket provided by the employer for private journeys of his employees or their family members; 87a[and]
(c) any contribution by the employer to an approved superannuation fund for employees 87b[; and]
The following clause (d) shall be inserted after clause (c) of sub-section (1) of section 115WB by the Finance Act, 2007, w.e.f. 1-4-2008 :
(d) any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate to his employees (including former employee or employees).
Explanation.—For the purposes of this clause,—
(i) “specified security” means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956)87c and includes employees’ stock option;
(ii) “sweat equity shares” means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called.
(2) The fringe benefits shall be deemed to have been provided by the employer to his employees, if the employer has, ============================================================== in the course of his business or profession (including any activity whether or not such activity is carried on with the object of deriving income, profits or gains) incurred any expense on, or made any payment for, the following purposes, namely:—
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(A) entertainment;
(B) provision of hospitality of every kind by the employer to any person, whether by way of provision of food or beverages or in any other manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade but does not include—
(i) any expenditure on, or payment for, food or beverages provided by the employer to his employees in office or factory;
(ii) any expenditure on or payment through paid vouchers which are not transferable and usable only at eating joints or outlets;
(C) conference (other than fee for participation by the employees in any conference).
Explanation.—For the purposes of this clause, any expenditure on conveyance, tour and travel (including foreign travel), on hotel, or boarding and lodging in connection with any conference shall be deemed to be expenditure incurred for the purposes of conference;
(D) sales promotion including publicity:
Provided that any expenditure on advertisement,—
(i) being the expenditure (including rental) on advertisement of any form in any print (including journals, catalogues or price lists) or electronic media or transport system;
(ii) being the expenditure on the holding of, or the participation in, any press conference or business convention, fair or exhibition;
(iii) being the expenditure on sponsorship of any sports event or any other event organised by any Government agency or trade association or body;
(iv) being the expenditure on the publication in any print or electronic media of any notice required to be published by or under any law or by an order of a court or tribunal;
(v) being the expenditure on advertisement by way of signs, art work, painting, banners, awnings, direct mail, electric spectaculars, kiosks, hoardings, bill boards 87d[, display of products] or by way of such other medium of advertisement; 88[***]
(vi) being the expenditure by way of payment to any advertising agency for the purposes of clauses (i) to (v) above;
89[(vii) being the expenditure on distribution of free samples of medicines or of medical equipment, to doctors; and
The following clause (vii) shall be substituted for the existing clause (vii) of proviso to clause (D) of sub-section (2) of section 115WB by the Finance Act, 2007, w.e.f. 1-4-2008 :
(vii) being the expenditure on distribution of samples either free of cost or at concessional rate; and
(viii) being the expenditure by way of payment to any person of repute for promoting the sale of goods or services of the business of the employer,]
shall not be considered as expenditure on sales promotion including publicity;
(E) employees’ welfare.
Explanation.—For the purposes of this clause, any expenditure incurred or payment made to fulfil any statutory obligation or mitigate occupational hazards or provide first aid facilities in the hospital or dispensary run by the employer shall not be considered as expenditure for employees’ welfare;
(F) conveyance 90[***];
(G) use of hotel, boarding and lodging facilities;
(H) repair, running (including fuel), maintenance of motor cars and the amount of depreciation thereon;
(I) repair, running (including fuel) and maintenance of aircrafts and the amount of depreciation thereon;
(J) use of telephone (including mobile phone) other than expenditure on leased telephone lines;
(K) maintenance of any accommodation in the nature of guest house other than accommodation used for training purposes;
(L) festival celebrations;
(M) use of health club and similar facilities;
(N) use of any other club facilities;
(O) gifts; and*
(P) scholarships;
91[(Q) tour and travel (including foreign travel).]
(3) For the purposes of sub-section (1), the privilege, service, facility or amenity does not include perquisites in respect of which tax is paid or payable by the employee 91[or any benefit or amenity in the nature of free or subsidised transport or any such allowance provided by the employer to his employees for journeys by the employees from their residence to the place of work or such place of work to the place of residence].
THE FOLLOWING WORDS ; in the course of his business or profession (including any activity whether or not such activity is carried on with the object of deriving income, profits or gains) LEAVES ROOM FOR INTERPRETATION THAT IN YOUR CASE NO BUSINESS WAS CARRIED ON HENCE NO fbt
CAclubindia
