FBT in the presumptive cases

Hi Mr Venkat,

Since doctors are not covered by any of the presumptive incomesections, I guess what you meant when you said "filed the return ofincome on presumptive basis" was that the firm had made aguesstimate of its income, probably not being required to maintainbooks of account under Section 44AA read with Rule 6F, as theirreceipts were below Rs 1.50 lacs.So I am answering this query taking yours to be a case where theassessee is covered by FBT but not required to maintain books ofaccounts u/s 44AA. Since there is no record of expenses, how do wedetermine the FBT?This is a gray matter. Here is Q and A No 42 of the FBT circular:[How should the accounting records be modified in order to complywith the FBT?42. There are no special requirements for accounting records underthe FBT. However, the Institute of Chartered Accountants of Indiahave advised Government that they will be issuing separateAccounting Standards to facilitate compliance with the provisions ofthe FBT.]Section 115WL says that all other provisions of the Act will beapplicable to fringe benefits also. So Section 44AA can't bedisregarded in computing the FBT. Also consider this excerpt from Q& A No 7:[It is a settled principle of law that where the computationprovision fails, the charging section cannot be effectuated.Therefore, if there is no provision for computing the value of anyparticular fringe benefit, such fringe benefit, even if it may fallwithin clause (a) of sub-section (1) of section 115WB, is not liableto FBT.]So what if there are no records of expenditure because the assesseeis exempted by law from maintaining the records thereof? Chapter XII-H hasn't specified anywhere how the FBT will be computed where booksaren't maintained. So can we contend that in the absence of thecomputational provisions in such cases, no FBT is payable?How about cases of presumptive income like a retail traderpartnership firm returning an income of Rs 1.50 lacs on a turnoverof Rs 30 lacs? If a retailer assessee files its return deeming 5% ofits sales as its income, it doesn't have to maintain any books. Buthow do we compute the FBT in such cases in the absence of details ofvarious expenses? Section 115WA, the charging section of FBT, putsthe FBT in a class of its own by opening with the words "in additionto the income tax charged under this Act". So the assessee can'teven contend that tax paid on the five per cent deemed profits ofhis retail business included the FBT as well.I think a clarification on this issue is long overdue. In your case,I would recommend that books be maintained for the doctors and theFBT be deposited. Even if you don't maintain them, it isn'tdifficult to determine and tabulate expenses liable to FBT.

Thanks,

CA Sanjeev Bedi

--- In http://finance.groups.yahoo.com/group/ICAI_CIRC_MEERUT_CA/post?postID=LQdaCGyqbD_UrbEx473pSJisYL9esMiwOLoHKg3nv3shYMhFethtaGHOgccqWhaBDbYTRj-Yz1REHay-q9UChAEGxGtv9DQqSg, "venkataraman k" wrote:>> Dear members> one of my clients (Partnership Firm) doctors by profession hasfiled the> return of income on resumtive basis and no details of> expenses etc. were given. I request of the view of the members onwhat basis> the FBT is to be calculated. if FBT is not paid> will the assessee be penalised for not complying with theprovisions.>

venkat>