By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi Chartered Accountants
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Rent paid for parking slots cannot be treated as car running expenses for the purpose of levy of FBT.
Facts:
The assessee had paid Rs.1.25 crores as rent for parking slots. These slots were used for parking cars of employees of the assessee. The FBT assessment was completed without considering this rent as fringe benefit. The CIT u/s.263 set aside the assessment relying upon the CBDT Circular No. 8 of 2005, dated 29th August, 2005.
Held:
In the present case, even though the rent pertaining to the car parking slots was mentioned distinctly and separately in the lease deed, the assessee was paying the sum as part of the overall rent paid to the landlord. The essential facilities attached to a rented building have to be treated as part of the building itself and therefore the rent or licence fee paid for such facilities should be treated as forming part of rent.
Further, the head of expenditure relied on by the CIT to hold the assessee liable for FBT in respect of rent relating to car parking area is ‘running, maintenance and repair expenses of cars’. The running expenses of a motor car usually include fuel oil and other incidental expenses. It may include the driver’s wages as well. It may even include the taxes. But it is very difficult to argue that car parking expenses are in the nature of running expenses. It is not possible to treat parking slot expenses as analogous to repair and maintenance. Hence, they cannot be included within the fringe benefits.
