TaxTMI 
TaxTMI 
2014 (5) TMI 934
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....ad not made a claim by revising the return and hence the assessing Officer had rightly rejected the appellant's claim. 3. That on the facts and in the circumstances of the case the CIT (A) erred on facts and in law in not adjudicating upon the fact the net expenditure of Rs 860.56 Lacs (Rs. 1592.63 Lacs- RS.732.07 Lacs) incurred on purchase of gift items could not be regarded as a Fringe benefit by any stretch of imagination. 4. That on the facts and in the circumstances of the case, the CIT (A) erred on facts and in law in not appreciating that the judgment of the Hon'ble Supreme Court in the case of Goetze India Limited was rendered in the context Assessment Year 1995-96, and that the decision of the Supreme Court was no longer applicable in AY 2007-08 in view of change in section 143(3) of the Act. 5. That the CIT (A) erred on facts and in law in not accepting the appellant's contention that notwithstanding the decision in Goetze India Limited case, the CIT (A) had the powers to adjudicate upon the appellant's claim on merits. 6. That on the facts and in the circumstances of the case, the CIT (A) erred on facts and in law in .not appreciating that the appella....
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....s for the sole purpose of promoting sales and did not result in providing, directly or indirectly, any benefit to any employee, the assessee had submitted before the Assessing Officer that such expenditure on purchase of gift items under sales promotion could not be included in the value of fringe benefit, and prayed before the Assessing Officer for reduction in the value of taxable value of Fringe Benefit and consequential benefit of tax thereon. The assessee prayed before the Assessing Officer for appropriate relief by treating the sum of Rs.860.56 lacs as not being liable to FBT under Chapter XII-H of the Act. The Assessing Officer denied the relief. The assessee preferred an appeal before the Commissioner of Income Tax(A) which was also dismissed by holding that in view of decision of Hon'ble Supreme Court in the case of Goetze India Ltd. vs Commissioner of Income Tax 284 ITR 323(SC), the Assessing Officer cannot entertain a claim of deduction otherwise than a revised return. Now, the assessee is again before this Tribunal with the grounds as mentioned hereinabove. 7. We have heard rival arguments of both the parties and carefully perused the record placed before us. Ld. couns....
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.... provided u/s 254 of the Act. 10. On careful consideration of above rival submissions and contention of both the parties, we are of the opinion that as per decision of Hon'ble Supreme Court in the case of Goetze India Ltd. vs C.I.T. (supra), when deduction is claimed after filing of return, then the Assessing Officer is not empowered to entertain that claim made otherwise than by way of revised return required to be filed u/s 139(5) of the Act. Further, we observe that operative last para of above decision of Hon'ble Supreme Court reads as under:- "The decision in question is that the power of the Tribunal under section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal ....
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.... careful reading of clause (i), (ii), (iv), (v), (vi) and (viii) of Section 115WB(2)(D) elucidates that the legislature has excluded from FBT expenditure in form of payments to third persons. The exemption in these clauses, it is apparent, has been granted because this is not a fringe benefit which is enjoyed by the "employee/recipient" but it is an expenditure incurred for the purpose of business and the payment is income earned by the third party. In the hands of the said recipient the expenditure is taxable as income earned. 18. We may reproduce the following observations of Madras High Court in Tuticorin Alkali Chemicals and Fertilizers (supra), wherein it has been held as under:- The term "sales promotion" is not to be confused with the sales actually effected. While "sales promotion" are measures taken by the assessee to promote generally the sales of the products manufactured by it, or dealt with by it, individual sales made in the normal course of business on commercial terms either directly to the customer, or through its wholesale and other dealers to whom, under the terms of trade discounts and commissions are allowed, cannot be regarded as sales promotion. This court ....
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....rchase of the car in question. 20. In this connection, the learned counsel for the appellant had drawn our attention to question No. 60 and the answer thereof in the CBDT Circular NO.8 of 2005 dated 28th September, 2005, which reads as under: 60. Whether 'sales promotion' includes sales discount or rebates to wholesalers or customers or bonus points given to credit card customers and, if so, whether FBT is payable thereon? Ans. Sales discount or rebates allowed to wholesale dealers or customers from the listed retail price merely represent lesser realization of the sale price itself. The bonus points given to credit card customers are also in the nature of deferred sale discount. Therefore, discounts or rebates or bonus points allowed to customers or wholesale dealers are in the nature of selling expenses and outside the scope of the provisions of clause (D) of sub -section (2) of section 115WB of the Income-tax Act. Accordingly, such discounts or rebates are not liable to FBT. 21. Learned counsel of the respondent, on the other hand, relied upon on the question No. 66 and the answer given in the same circular. Reference is also made to question Nos. 97 and 98 which agai....
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....le itself. Cars with same or similar body and engine have different models depending upon the features and accessories. The cost price depends upon the features and accessories. Question No. 66, which has been answered, relates to tattoos, cards or similar products, which really do not have any connection or nexus with the product which is sold. The car accessories are provided for better enjoyment and utilization of the product, which is purchased. The utility of the product improves and gives more satisfaction to the purchaser, who is paying the price. In answer to question No. 60, the CBDT has observed that discounts cannot be treated and regarded as sale promotion. It is a common and normal market practice, to supply upgraded products for a lower price or include extra quantity in the same price and state that the additional quantity, which is being offered, is free. Such cases will be covered by the question and answer No. 60 and not by the question and answer No. 66. 23. In the present case, the Revenue did not invoke clause (0) to sub-section (2) to Section 115WB. It was not the contention of the Revenue that the accessories given free of cost as gifts. This is rightly so a....
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....urisdictional High Court of Delhi in the case of T&T Motors Ltd. vs ACIT (supra), we hold that as per CBDT Circular No. 8 of 2005 dated 28.9.2005, question no. 60 clarifies that discount or rebates are not liable to FBT and present case of the assessee falls within four corners of above decision of Hon'ble Delhi High Court in the case of T&T Motors vs ACIT (supra) and CBDT Circular No. 8 of 2005. Therefore, we find it just and proper that the claim for deduction of the assessee is allowable. At the cost of repetition, we further hold that the Assessing Officer is not empowered to entertain the claim for deduction of the assessee, after filing of return otherwise than by filing a revised return but the powers of this Tribunal as an appellate authority u/s 254 of the Act do not impinge upon by the decision of Hon'ble Supreme Court in the case of Goetze India Ltd. vs C.I.T. (supra). 14. Thus, we further hold that the Assessing Officer rightly rejected the claim of the assessee which was filed by way of an application after filing of return because the Assessing Officer was not empowered to entertain the claim of the assessee otherwise than by filing a revised return. At the same time....