R & B Falcon vs. CIT (Supreme Court)

DATE: (Date of pronouncement)
DATE: May 7, 2008 (Date of publication)

(1) Transportation cost incurred by a foreign assessee in providing transportation facility for movement of offshore employees from their residence in home country to the place of work and back is liable to Fringe Benefit Tax u/s 115WA.

(2) Sub-sections (1) and (2) of section 115WB operate in different fields. S. 115WB(2) cannot be regarded as an extension of section 115WB(1). Sub-sec (3) of s. 115WB has application only in respect of sub-sec (1) and ex facie does not have any application in regard to the matters referred to in sub-sec (2).

(3) The contention that the employees must be based in India for purposes of sub-sec. (3) of s. 115WB cannot be accepted because it is contrary to the language and the CBDT Circular.

(4) The CBDT’s interpretation, being in the realm of executive construction, should ordinarily be held to be binding, save and except where it violates any provisions of law or is contrary to any judgment rendered by the courts. It is a contemporaneous exposition and akin to a representation made by an authority like Minister presenting the Bill before the Parliament.

(5) On facts, the AO to consider on material on record whether the payments were made on a regular basis or whether the expenditures incurred would strictly come within the purview of Section 115WB or not.

Note: The judgement of the AAR is reported in 289 ITR 369.