2013 (5) TMI 372

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....f Rs. 50.97 crore which are on account of sales promotion cannot be charged under FBT without appreciating that sales promotion expenses is to be included in the value of taxable fringe benefits as provided u/s 115WB (2) of the I.T. Act. 2. For these and other grounds that may be urged at the time of hearing, the decision of the CIT (A) may be set aside and that of the AO restored." 3. At the outset, Shri Dinesh Vyas, Ld Counsel for the assessee mentioned that the issue relates to taxability of sales promotion expenses of Rs. 50.97 crores under the provisions relating to FBT (Fringe Benefit Tax) u/s 115WB (2) of the I.T. Act. The Revenue is of the opinion that the said amounts are to be included in the value of FBT as provided under s....

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.... provisions of FBT cannot be invoked. If on the touchstone of this principle case under consideration is tested it becomes clear that addition made by the AO to the value of the FB (Fringe Benefit) cannot be endorsed. Though the AO and the FAA have held that expenses incurred by the assessee under the head 'hotel expenses and car expenses' were incurred for employees, yet they have nowhere referred to any material on the basis of which they arrived at the said conclusion. The fact of benefit to employees has not been established, therefore, in our opinion value of car expenses and hotel expenses cannot be added to the FB value declared by the assessee-company. As far as values of brand promotion expenses are concerned they cannot be treated....

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.... collectively by the employees and this is totally missing in the present case of brand equity payment and hence cannot be subjected to FBT. Even the CBDT's Circular No.8, dated 29.8.2005 clarifies in reply to question no.2 as to whether employer-employee relationship was a pre-requisite for the levy of FBT by replying in the affirmative. In the present case, as rightly held by the CIT (A), the payment has been made for business promotion to another group company, without there being any benefit accruing to any of the employees of the assessee. Thus the very basis for levy of FBT, namely the collective enjoyment of some benefit by the employees is missing. Therefore, Fringe Benefit Tax would not be leviable unless benefit accrues collective....