FBT – In Court
The Fringe Benefit Tax, the new goose that the Finance Minister discovered is in trouble, maybe largely because the FM’s boys put so much pressure on it to lay too many golden eggs. The recent Board clarification must have put too much load on the egg laying capacity of the poor goose.
Now the FBT is challenged at least in two High Courts.
Strangely in the Congress Ruled state of Andhra Pradesh, a state owned PSU, Andhra Pradesh Industrial Infrastructure Corporation (APIIC), has filed a writ in the AP High Court. The APIIC is not challenging the FBT but wants it to be included in the exempted category.
A CA firm represented by its partner, a former President of the ICAI, has challenged the FBT in the Madras High Court on the following grounds:-
1. It violates the following provisions of the constitution.
i. Article 14 - Equality before law
ii. Article 19 - Right to Freedom – profession
iii. Article 265 - No tax without authority of law
2. It amounts to double taxation as no deduction of expenditure is allowed.
3. It discriminates between different categories of employers.
4. The cost of administration would be heavy.
5. It is against the basic concept of income-tax law
6. It is without any rationale.
Other Court battles are sure to follow soon.