Section 115WM is the abolition switch. It provides that 'nothing contained in this Chapter shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.' The technique is a prospective dis-application, not an omission: ss.115W to 115WL remain physically on the statute book but cease to operate from AY 2010-11. FBT was therefore live only for AYs 2006-07 to 2009-10.
Historical context / FA amendment trail
Inserted by the Finance (No. 2) Act, 2009 with effect from AY 2010-11, abolishing FBT after four years. On abolition, the ESOP perquisite reverted to taxation in the employee's hands under s.17(2). The 2025 consolidating Act does not re-enact the FBT code.
Operative consequences
• FBT does not apply for AY 2010-11 onwards; it remained fully operative for AYs 2006-07 to 2009-10.
• The sunset is prospective only — accrued FBT liabilities and pending proceedings for the operative years survive (cf. s.6, General Clauses Act, 1897).
• FBT disputes continue to be decided long after abolition (e.g. Aristo Pharmaceuticals (2020); Apar Lubricant (2026)).
• On abolition, ESOP/sweat-equity benefits reverted to perquisite taxation under s.17(2) in the employee's hands.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Block 1 reproduces the statutory text verbatim from the Income-tax Act, 1961 (text as printed; the Chapter remains on the statute book but is inapplicable from AY 2010-11 by s.115WM). The Finance Act, 2026 makes no substantive change to Chapter XII-H. Not legal advice.
Case Laws & Commentary
Section 115WM — Chapter XII-H Not to Apply After a Certain Date (Sunset / Abolition of FBT)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Chapter: XII-H — Income-tax on Fringe Benefits (Fringe Benefit Tax). Inserted by the Finance Act, 2005 with effect from assessment year 2006-07.
Operative life: FBT was levied for assessment years 2006-07 to 2009-10. By section 115WM (inserted by the Finance (No. 2) Act, 2009), the Chapter does not apply from assessment year 2010-11 onwards. The sections were NOT omitted — they remain on the statute book but are switched off prospectively.
Finance Act, 2026: Makes no substantive amendment to Chapter XII-H. (The Finance Act, 2026 carries only consequential cross-references to sections 115WD/115WH in a penalty provision; the FBT charge, scope and machinery are untouched.)
Part: C — Procedure for filing of return, assessment and payment.
Inserted: By the Finance (No. 2) Act, 2009 — the abolition (sunset) provision for FBT, effective from assessment year 2010-11.
A. SECTION COMMENTARY
Section 115WM is the abolition switch. It provides that 'nothing contained in this Chapter shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.' Inserted by the Finance (No. 2) Act, 2009, it brought FBT to an end after only four years of operation (assessment years 2006-07 to 2009-10). Importantly, the technique used was a prospective dis-application, not an omission: sections 115W to 115WL remain physically on the statute book, but they cease to operate from assessment year 2010-11.
Two consequences follow. First, FBT liabilities, returns, assessments, reassessments, appeals and refunds for the four live years (2006-07 to 2009-10) continued — and continue — to be governed by the Chapter as if it were in force for those years; the sunset is forward-looking only. That is why FBT disputes are still being decided long after 2009 (see Aristo Pharmaceuticals, decided 2020, and Apar Lubricant, decided 2026). Secondly, on abolition the perquisite value of ESOPs reverted to taxation in the employee's hands under section 17(2) (with consequential rules), reversing the FBT treatment of 115WB(1)(d).
There is no reported decision construing section 115WM itself; its meaning is plain. Its practical effect — that the repeal/sunset does not disturb accrued liabilities and pending proceedings for the operative years — accords with the general principle (section 6 of the General Clauses Act, 1897) that the repeal of an enactment does not affect rights, liabilities or proceedings accrued or instituted under it unless a contrary intention appears.
B. STATUTORY POSITION (verbatim text)
Section 115WM, Income-tax Act, 1961:
115WM. Nothing contained in this Chapter shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.
C. AUTHORITIES
Candour note: there is no reported decision construing section 115WM. Its prospective-only sunset is plain, and accrued FBT liabilities/proceedings for AYs 2006-07 to 2009-10 survive — illustrated by the post-abolition decisions below and underpinned by the saving principle in section 6, General Clauses Act, 1897.
Pr. CIT v. Aristo Pharmaceuticals (P) Ltd. (2020) 423 ITR 295 (Bom.)
Court: Bombay High Court; judgment dated 23 January 2020; assessment year 2006-07 (the first year of FBT).
Facts: A pharmaceutical company distributed free medicine samples to medical practitioners (doctors) to promote its products. The Assessing Officer sought to bring the expenditure within the FBT net under Chapter XII-H.
Held: For a levy of fringe benefit tax under section 115WA there must exist a relationship of employer and employee, because fringe benefits are, by definition, benefits provided by an employer to his employees. The doctors to whom free samples were given were not employees of the assessee; there being no employer-employee relationship, the expenditure could not be construed as a fringe benefit and was not liable to FBT.
Significance: Leading High Court authority establishing the employer-employee relationship as a jurisdictional condition precedent for the charge under section 115WA. Expenditure on non-employees (doctors, customers, dealers, third parties) cannot be swept into FBT merely because it is business promotion.
Apar Lubricant Ltd. v. DCIT-14(1)(1), 2026 TAXSCAN (ITAT) 171, ITA No. 7360/Mum/2025 (ITAT, Mumbai)
Tribunal / Bench: Income-tax Appellate Tribunal, Mumbai (Amit Shukla, Judicial Member, and Makarand Vasant Mahadeokar, Accountant Member); order dated 27 January 2026. A recent decision confirming that FBT disputes for the historic FBT years continue to be litigated and resolved.
Facts: The assessee, engaged in marketing lubricants, spent about Rs. 1.41 crore on advertising, publicity and sales promotion — performance incentives to dealers and distributors, promotional articles (key-chains, torches, T-shirts, bags), payments to advertising agencies, exhibition stall charges and sales commission. In reassessment the AO treated 20% of this (Rs. 1.08 crore) as a deemed fringe benefit under section 115WB(2)(D).
Held: The deeming provision in section 115WB(2) cannot be applied mechanically; FBT rests on the foundational concept of a 'consideration for employment', and there must be material showing that a benefit (direct or indirect) actually passed to employees. As the impugned expenditure was directed at independent third parties (dealers, distributors, customers, advertising vendors) and not employees, it was not a fringe benefit. The Tribunal deleted the Rs. 1.08 crore addition. It followed the Delhi High Court in T&T Motors Ltd. (that where accessories/promotional items are supplied to customers as part of a sale package for which consideration is paid, the expenditure is not sales promotion liable to FBT).
Significance: 'FBT is not intended to tax every business expenditure, but only those expenditures which, in substance and reality, represent a benefit to employees.' Reinforces R & B Falcon and Aristo Pharmaceuticals: the charge is confined to employer-to-employee benefits and the 115WB(2) fiction is anchored to that purpose.
C-2 Saving of accrued liabilities on sunset (principle)
Section 6, General Clauses Act, 1897 (saving on repeal) — principle
Effect: A prospective dis-application/repeal does not, by itself, affect liabilities incurred, or proceedings instituted, under the enactment for the period it was in force, unless a contrary intention appears. Section 115WM contains no such contrary intention; FBT for AYs 2006-07 to 2009-10 therefore remained fully enforceable and assessable after abolition.
Caveat: Stated as a general principle of statutory interpretation; no FBT-specific decision was required to establish the survival of the four operative years.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced verbatim from the Income-tax Act, 1961 (text as printed in the Act, the Chapter remaining on the statute book but rendered inapplicable from assessment year 2010-11 onwards by section 115WM). Citations are stated as reported; rulings of the Authority for Advance Rulings and orders of the Tribunal are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority (including the machinery provisions imported by section 115WL) is given. This material is for professional reference and is not legal advice.
Function in the statutory architecture
Section 115WM is the abolition switch. It provides that 'nothing contained in this Chapter shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.' The technique is a prospective dis-application, not an omission: ss.115W to 115WL remain physically on the statute book but cease to operate from AY 2010-11. FBT was therefore live only for AYs 2006-07 to 2009-10.
Historical context / FA amendment trail
Inserted by the Finance (No. 2) Act, 2009 with effect from AY 2010-11, abolishing FBT after four years. On abolition, the ESOP perquisite reverted to taxation in the employee's hands under s.17(2). The 2025 consolidating Act does not re-enact the FBT code.
Operative consequences
• FBT does not apply for AY 2010-11 onwards; it remained fully operative for AYs 2006-07 to 2009-10.
• The sunset is prospective only — accrued FBT liabilities and pending proceedings for the operative years survive (cf. s.6, General Clauses Act, 1897).
• FBT disputes continue to be decided long after abolition (e.g. Aristo Pharmaceuticals (2020); Apar Lubricant (2026)).
• On abolition, ESOP/sweat-equity benefits reverted to perquisite taxation under s.17(2) in the employee's hands.
______________________________________________________________________________________________
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Block 1 reproduces the statutory text verbatim from the Income-tax Act, 1961 (text as printed; the Chapter remains on the statute book but is inapplicable from AY 2010-11 by s.115WM). The Finance Act, 2026 makes no substantive change to Chapter XII-H. Not legal advice.
Case Laws & Commentary
Section 115WM — Chapter XII-H Not to Apply After a Certain Date (Sunset / Abolition of FBT)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Chapter: XII-H — Income-tax on Fringe Benefits (Fringe Benefit Tax). Inserted by the Finance Act, 2005 with effect from assessment year 2006-07.
Operative life: FBT was levied for assessment years 2006-07 to 2009-10. By section 115WM (inserted by the Finance (No. 2) Act, 2009), the Chapter does not apply from assessment year 2010-11 onwards. The sections were NOT omitted — they remain on the statute book but are switched off prospectively.
Finance Act, 2026: Makes no substantive amendment to Chapter XII-H. (The Finance Act, 2026 carries only consequential cross-references to sections 115WD/115WH in a penalty provision; the FBT charge, scope and machinery are untouched.)
Part: C — Procedure for filing of return, assessment and payment.
Inserted: By the Finance (No. 2) Act, 2009 — the abolition (sunset) provision for FBT, effective from assessment year 2010-11.
A. SECTION COMMENTARY
Section 115WM is the abolition switch. It provides that 'nothing contained in this Chapter shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.' Inserted by the Finance (No. 2) Act, 2009, it brought FBT to an end after only four years of operation (assessment years 2006-07 to 2009-10). Importantly, the technique used was a prospective dis-application, not an omission: sections 115W to 115WL remain physically on the statute book, but they cease to operate from assessment year 2010-11.
Two consequences follow. First, FBT liabilities, returns, assessments, reassessments, appeals and refunds for the four live years (2006-07 to 2009-10) continued — and continue — to be governed by the Chapter as if it were in force for those years; the sunset is forward-looking only. That is why FBT disputes are still being decided long after 2009 (see Aristo Pharmaceuticals, decided 2020, and Apar Lubricant, decided 2026). Secondly, on abolition the perquisite value of ESOPs reverted to taxation in the employee's hands under section 17(2) (with consequential rules), reversing the FBT treatment of 115WB(1)(d).
There is no reported decision construing section 115WM itself; its meaning is plain. Its practical effect — that the repeal/sunset does not disturb accrued liabilities and pending proceedings for the operative years — accords with the general principle (section 6 of the General Clauses Act, 1897) that the repeal of an enactment does not affect rights, liabilities or proceedings accrued or instituted under it unless a contrary intention appears.
B. STATUTORY POSITION (verbatim text)
Section 115WM, Income-tax Act, 1961:
115WM. Nothing contained in this Chapter shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.
C. AUTHORITIES
Candour note: there is no reported decision construing section 115WM. Its prospective-only sunset is plain, and accrued FBT liabilities/proceedings for AYs 2006-07 to 2009-10 survive — illustrated by the post-abolition decisions below and underpinned by the saving principle in section 6, General Clauses Act, 1897.
C-1 FBT disputes survive abolition — post-2009 decisions
Pr. CIT v. Aristo Pharmaceuticals (P) Ltd. (2020) 423 ITR 295 (Bom.)
Court: Bombay High Court; judgment dated 23 January 2020; assessment year 2006-07 (the first year of FBT).
Facts: A pharmaceutical company distributed free medicine samples to medical practitioners (doctors) to promote its products. The Assessing Officer sought to bring the expenditure within the FBT net under Chapter XII-H.
Held: For a levy of fringe benefit tax under section 115WA there must exist a relationship of employer and employee, because fringe benefits are, by definition, benefits provided by an employer to his employees. The doctors to whom free samples were given were not employees of the assessee; there being no employer-employee relationship, the expenditure could not be construed as a fringe benefit and was not liable to FBT.
Significance: Leading High Court authority establishing the employer-employee relationship as a jurisdictional condition precedent for the charge under section 115WA. Expenditure on non-employees (doctors, customers, dealers, third parties) cannot be swept into FBT merely because it is business promotion.
Apar Lubricant Ltd. v. DCIT-14(1)(1), 2026 TAXSCAN (ITAT) 171, ITA No. 7360/Mum/2025 (ITAT, Mumbai)
Tribunal / Bench: Income-tax Appellate Tribunal, Mumbai (Amit Shukla, Judicial Member, and Makarand Vasant Mahadeokar, Accountant Member); order dated 27 January 2026. A recent decision confirming that FBT disputes for the historic FBT years continue to be litigated and resolved.
Facts: The assessee, engaged in marketing lubricants, spent about Rs. 1.41 crore on advertising, publicity and sales promotion — performance incentives to dealers and distributors, promotional articles (key-chains, torches, T-shirts, bags), payments to advertising agencies, exhibition stall charges and sales commission. In reassessment the AO treated 20% of this (Rs. 1.08 crore) as a deemed fringe benefit under section 115WB(2)(D).
Held: The deeming provision in section 115WB(2) cannot be applied mechanically; FBT rests on the foundational concept of a 'consideration for employment', and there must be material showing that a benefit (direct or indirect) actually passed to employees. As the impugned expenditure was directed at independent third parties (dealers, distributors, customers, advertising vendors) and not employees, it was not a fringe benefit. The Tribunal deleted the Rs. 1.08 crore addition. It followed the Delhi High Court in T&T Motors Ltd. (that where accessories/promotional items are supplied to customers as part of a sale package for which consideration is paid, the expenditure is not sales promotion liable to FBT).
Significance: 'FBT is not intended to tax every business expenditure, but only those expenditures which, in substance and reality, represent a benefit to employees.' Reinforces R & B Falcon and Aristo Pharmaceuticals: the charge is confined to employer-to-employee benefits and the 115WB(2) fiction is anchored to that purpose.
C-2 Saving of accrued liabilities on sunset (principle)
Section 6, General Clauses Act, 1897 (saving on repeal) — principle
Effect: A prospective dis-application/repeal does not, by itself, affect liabilities incurred, or proceedings instituted, under the enactment for the period it was in force, unless a contrary intention appears. Section 115WM contains no such contrary intention; FBT for AYs 2006-07 to 2009-10 therefore remained fully enforceable and assessable after abolition.
Caveat: Stated as a general principle of statutory interpretation; no FBT-specific decision was required to establish the survival of the four operative years.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced verbatim from the Income-tax Act, 1961 (text as printed in the Act, the Chapter remaining on the statute book but rendered inapplicable from assessment year 2010-11 onwards by section 115WM). Citations are stated as reported; rulings of the Authority for Advance Rulings and orders of the Tribunal are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority (including the machinery provisions imported by section 115WL) is given. This material is for professional reference and is not legal advice.