2014 (3) TMI 685

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.... "1. In law and in the facts and in circumstances of the appellant's case, the learned CIT(A) has grossly erred in confirming the addition of Rs.4,37,63,203/- even though they have not been incurred for the employees of the appellant company. 2. In law and in the facts and in circumstances of the case, learned CIT(A) erred in not appreciating that fringe benefit tax is not liable to be paid by the appellant in respect of the following items of expenditure as they have been incurred only with relation to non-employees and are being purely for the business purposes of the appellant. Sr. Particulars FBT (Non-Employees) No. Expenditure 1 Conference 1,22,76,602 2 Sales promotion including publicity 15,33,70,687....

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....f the following items of expenditure as they have been incurred only with relation to non-employees and are being purely for the business purposes of the appellant. 3. The ld.CIT(A) erred in law and in the facts and in circumstances of the case by incorrectly applying the provisions of section 115WB(2) of the Income Tax Act, 1961 and thereby levying FBT on expenditure which had no direct/indirect connection to the employees of the appellant company which is precondition as per the provisions of the Act and also the legislative intent as explained by the budget speech in the explanatory notes. 4. The ld.CIT(A) erred while acting as the first appellate authority under the Income-tax Act, 1961 was certainly not bound by that Circular and....

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....red his own decision on all the issues raised by the appellant in its appeal before him without being bound by the said CBDT Circular." 5. The learned counsel for the assessee submitted that the only issue in this ground of the appeal of the assessee for all three years is regarding addition made on account of Fringe Benefit Tax ("FBT" for short), although, they were not incurred for the employees of the assessee-company, and were in fact with relation to non-employees and purely for the business purpose of the assessee. He submitted that the issue is covered in favour of the assessee with the decision of the ITAT, Ahmedabad Bench in Arvind Fashions Ltd. Vs. DCIT, in ITA No.3508 and 3509/Ahd/2010 for the assessment year 2006-07 order dat....

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....the expenditure in relation to non-employees and for the business purpose of the assessee. The claim of the assessee was that the expenses were not related to its employees and were incurred only in relation to non-employees and for business purpose of the assessee-company. In these facts, we are of the view that it shall be in the interest of justice to restore the issue in the grounds of the appeal of the assessee for all three years to the file of the AO with direction to decide the same de novo in accordance with law after providing reasonable opportunity of hearing to the assessee in the light of decisions of the ITAT, Ahmedabad Bench in Arvind Fashions Ltd. Vs. DCIT (supra). The AO is further directed to record a clear finding that wh....