S. B. SINHA, J.

( 1 ) LEAVE granted.

( 2 ) INTERPRETATION and/or application of the provisions of Section 115wb of the Income Tax Act, 1961 (for short, 'the Act') providing for imposition of tax on 'fringe benefits' is in question herein.

( 3 ) BEFORE embarking upon the said question, however, we may notice the basic fact of the matter. Appellant is incorporated under the laws of the Commonwealth of australia. It is engaged in the business of providing Mobile Offshore drilling Rig (MODR) along with crew on a day rate charter hire basis to drill offshore wells. The MODR operates offshore (upto 200 nautical miles off the coast of India ). Allegedly, having regard to the harsh working environment and purported to be in line with global practices typical to such industry, the employees who may be residents of various countries including australia, USA, UK, France etc. work on the MODR on a 'commuter basis'. They come to India, stay in the Rig for 28 days and go back to their own country being their place of residence for a further period of 28 days. The crew or the employees are transported from their home country to the modr in two laps :

- first is from the nearest designated base city at the place of residence in the home country to a designated city in India for which the petitioner provides free air tickets of economy class and;- second is from that city in India to the MODR through helicopter especially hired by the petitioner for this purpose.

( 4 ) ALLEGEDLY, on completion of 28 days, they go back from the Rig to the designated base city in their home country in the same manner. Appellant states that no conveyance/transport allowance is paid to them. Appellant entered into a contract of supplying MODR along with equipment and offshore crew on charter hire basis with Oil and Natural Gas commission, a public sector undertaking, on or about 10. 10. 2003. It filed an application under Section 245q (1) of the Income Tax Act, 1961 before the authority for Advance Ruling (AAR) on the following question : "whether transportation cost incurred by the petitioner 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?"

( 5 ) CHAPTER XII of the Act providing for income tax on fringe benefits was inserted by the Finance Act, 2005. It came into force with effect from 1. 4. 2006.

( 6 ) SECTION 115w defines "employer" and "fringe benefit tax". "fringe benefit Tax" (FBT) has been defined as a tax chargeable under Section 115wa. Section 115 WA (1) provides for the basis for charge of fringe benefit tax in the following terms :

"115wa. (1) In addition to the income-tax charged under this Act, there shall be charged for levy assessment year commencing on or after the 1st day of April, 2006, additional income-tax (in this act referred to as fringe benefit tax) in respect of the fringe benefits provided or deemed to have been provided by an employer to his employees during the previous year at the rate of thirty per cent on the value of such fringe benefits. (2) Notwithstanding that no income-tax is payable by an employer on his total income computed in accordance with the provisions of this Act, the tax on fringe benefits shall be payable by such employer. "

Section 115wb consists of three sub-sections, the relevant clauses whereof read as under:"section 115wb - Fringe benefits (1) For the purposes of this Chapter, "fringe benefits" means any consideration for employment provided by way of- (a) any privilege, service, facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise, to his employees (including former employee or employees); (b) any free or concessional ticket provided by the employer for private journeys of his employees or their family members; and xxx xxx xxx (2) The fringe benefits shall be deemed to have been provided by the employer to his employees, if the employ