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FBT Exps. Disallowed

SSG (1936 Points)

30 November 2008

The Assessing Officer disallowed certain expenses - car depreciation, car repairs and diesel exps. and telephone bills to the partnership
firm and added 20% of these dissallowed expenses to the personal income of the partners. The firm had missed to file the Fringe Benefit tax and
return, so A.O. has asked the firm to pay FBT and file the required return. Now while calculating the fringe benefits, do the expenses which were
dissallowed by the A.O. be deducted from the fringe benefits of the firm.

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5 Replies

Ashish Goyal (Service) (156 Points)
Replied 30 November 2008

The expenses disallowed by AO shall not be considered for computation of Fringe Benefits....Only the amount allowed by AO shall be chargeable to FBT...

praveen (Chartered Accountant) (6971 Points)
Replied 30 November 2008

Yes Ashish goyal is right

Rajat Kedia ACA CS MCOM (Assistant Manager) (613 Points)
Replied 01 December 2008

correct answer

CA RAVINDER GARG (ACCOUNTS OFFICER) (85 Points)
Replied 01 December 2008

CORRECT ANS. SEE CIRCULAR OF FBT

CA Surajit Kashyapi (Chartered Accountant) (112 Points)
Replied 01 December 2008

Very simple..

There are some expenses (employee benefit related) in the organisation which will be under the perview of FBT. So if any expenses will be considered under FBT value then it will not be treated taxable in the hand of concerned employee like mobile bill reimbursement, conveyance etc and in this case oganisation need to pay FBtax accordingly. On the other hand if that expenses (employee benefit related) will not be considered under FBT then concerned employee will be taxable for that expenses like salary, medical or other CTC factors.

Here AO has disallowed some expenses and added (20% of that) with partners income so that amount (100% of such expenses) will not be considered in FBT. Organisation will not pay FBtax on that because employee will be taxable for that amount now.

If Expenses is Rs 1000.00. Suppose AO has added 20% of Rs 1000 = Rs 200.00 with the income of Partners. So Rs 1000.00 will not be considered in FBT and Organisation will not pay FBtax on Rs 1000.00. Partner will be taxable for Rs 200.00 only.