2013 (10) TMI 79

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....e, called "Hero Bumper Bonanza Foreign Trip and Attractive Gift" provided that free gifts/foreign trips would be given to dealers for specified amount of purchases from the assessee, the expense so incurred is liable to fringe benefit tax. The Central Board of Direct Taxes (hereinafter referred to as 'the CBDT"), has clarified in answer to question No.61 that such a benefit shall invite fringe benefit tax. The ITAT has wrongly held to the contrary by relying upon answer of the CBDT to question No.66 and, therefore, the following questions of law arises for consideration:- "Whether, on the facts and circumstances of the case, the Hon'ble ITAT is right in law in holding that the case of the assessee is covered by question No.66 of circular....

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...." Points No.2&3 of the scheme clearly show that both the parts of the scheme promise free gifts/foreign trips to the dealers on their making specified amount of purchases irrespective of the quantity of sale achieved by them. The scheme also provides that it is not convertible in cash implying thereby that the dealers will get only free gifts or free foreign trips. From this analysis it is very clear that the scheme is to promote sales of the appellant. As it is not based on the performance of the dealers in achieving certain sales target it cannot by any stretch of imagination be termed as performance based commission as contemplated under Q.No.61 of the aforesaid circular. Thus the expenditure of Rs.3,19,20,449/- is squarely covered by....

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.... to question no.61 and would be known as incentive to the dealer. The situation in question no.66 can be of various types. For example if the consumer buys one trouser and he may be entitled to one free shirt or the dealer would get a free silver coin being offered on every 10 units of the products sold. Therefore, situation in question no.66 is quite different because that does not refer to a particular target and is available for trade sale or to customers. The Assessing Officer and the CIT(A) has both opined that merely by lifting of a particular quantity of the product sold by the assessee, it cannot be said that dealer has achieved a particular target but while holding so they have not considered basic effect that as far as the assesse....