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Madras HC grants interim stay on fringe benefit tax

Our Legal Correspondent

Chennai , Sept. 14

ENFORCEMENT of the fringe benefit tax introduced by the Centre in the 2005-06 Budget has been stayed in the Madras High Court, in respect of a city-based chartered accountant firm.

Mr Justice K. Raviraja Pandian, who heard the counsel for Kumbhat & Co, granted the interim injunction. The petitioner challenged the constitutional validity of Sections 115WA to 115WL of the Income-tax Act, which sought to tax "privileges, services, facilities and amenities directly or indirectly provided by an employer to an employee or reimbursements made directly or indirectly for any purpose".

The petitioner contended that these provisions were ultra vires of Articles 14 and 19(1)(g) of the Constitution.

The levy of the fringe benefit tax would amount to double taxation, as already the new chapter did not allow FBT as a deductible expenditure. The petitioner, therefore, prayed for staying the new provisions.

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