FBT Liability

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Vivek Gangwal (Querist)
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27 November 2007 Whether Pre–Operative Expenses incurred for the Projects yet to be capitalized liable for Fringe Benefits Tax since POP Expenses claim as Revenue in IT & in Corporate Books it is added to the Cost of Assets which is amortized along with the cost of Assets over the period of its life on which we are not paying FBT at present.

K V Subba Rao

K V Subba Rao (Expert)
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27 November 2007 Chapter 5 of 2005 edition of the Taxmann's Guide to FBT & BCTT deals with "Guidelines for calculation of FBT".

You find General Principles under caption "Construction Business" in the above Chapter 5

As per first item of General Principles, "Total business expenditure, whether capital or revenue, should be shown..."

It appears from the above that capial or revenue nature of expenditure does not make any difference when it comes to payment of FBT.

R.V.RAO

R.V.RAO (Expert)
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27 November 2007 THE ISSUE OF FBT ON PREOPERATIVE EXPENSES IS SETTLED BY THE CIRCULAR NO 8/2005 DT.29 TH AUGUST 2005 , WHICH SAYS THAT ANY EXP. INCURRED FOR THE PURPOSE REFERRED IN CLAUSES (A) to (P) OF SEC 115 WB(2) IS LIABLE TO FBT IRRESPECTIVE WHETHER SUCH EXP. IS INCURRED PRIOR TO COMMENCEMENT OF THE BUSINESS OR THEEAFTER.
R.V.RAO