Tribunal: No FBT on relocation expenses; Partial relief on advertising costs.

The Tribunal ruled in favor of the assessee regarding the addition to the value of fringe benefits on account of relocation expenses for the A.Y. 2006-07, stating that FBT was not applicable to these expenses. For the A.Y. 2007-08, the Tribunal partially allowed the appeal concerning FBT addition under the head "advertising, publicity, and sales promotion," remanding the issue for fresh adjudication by the AO.

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Issues:
1. Addition to the value of fringe benefits on account of relocation expenses.
2. FBT addition under the head "advertising, publicity, and sales promotion."

Analysis:

Issue 1: Addition to the value of fringe benefits on account of relocation expenses
The appeals were filed against the orders of the Ld.CIT(A) pertaining to the A.Y. 2006-07 and 2007-08 confirming the AO's order under section 115 WE(3) of the Income Tax Act, 1961. The assessee, a soft drink manufacturing company, filed its FBT returns for both years. The AO determined the fringe benefit value for 2006-07 at &8377; 11,91,48,469/- and for 2007-08 at &8377; 18,44,29,059/-. The assessee contended that certain expenses under "conveyance, tour, and travels" were not liable to FBT as they were for employee relocation and conveyance. The A.O. rejected this explanation.

The Ld.CIT(A) upheld the AO's decision, stating that the assessee failed to prove the actual expenses incurred by employees for relocation. The Ld.Counsel for the assessee argued that detailed evidence was submitted, including expenses for transportation of household goods and conveyance of employees, which were not subject to FBT. Referring to the Tribunal's decision in a similar case, the counsel emphasized that payments to third parties for transportation were not FBT applicable. The A.O.'s acceptance of relocation expenses being reimbursed was highlighted. The Tribunal found in favor of the assessee, stating that FBT was not applicable to these expenses.

Issue 2: FBT addition under the head "advertising, publicity, and sales promotion"
For the A.Y. 2007-08, an amount was offered to FBT under this head, but the AO determined a higher value without considering the submissions of the assessee. The Ld.CIT(A) noted that 75% of the details were furnished, but the full details were claimed to have been provided. The Ld.Counsel argued that all details were submitted, supported by vouchers and documents. The Ld.D.R. contended that the assessee failed to provide sufficient evidence. The Tribunal decided to set aside this issue for fresh adjudication by the AO.

In conclusion, the Tribunal allowed the appeal for the A.Y. 2006-07 and partially allowed the appeal for the A.Y. 2007-08, ruling in favor of the assessee on both issues.

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