TaxTMI 
TaxTMI 
2014 (7) TMI 587
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....enefit to the employees was not liable to FBT. 3. The learned CIT(A) erred in not appreciating that the expenditure incurred under the head "Market Support', "Travelling and Conveyance" "Conference", "Sales Promotion'', "Use of hotel, boarding and lodging facilities" and "Use of telephone" were genuine business expenditure which were not resulting in any direct benefit to the employees either collectively or individually and hence, the said expenses were not liable to levy of FBT. 4. The learned CIT(A) erred in confirming that : i. Rs. 2,39,77,624/- being expenditure grouped under Advertisement and discount are relating to Brand Building of a particular product and hence not covered by the exception provided in Section 115WB(2)(D) without appreciating that the said expenditure was covered within the exceptions provided in section 115WB(2)(D) and hence, no FBT was payable by the appellant company. ii. that Rs. 33,74,874/- being credit notes each below Rs. 5 lakhs grouped under Advertisement and discount are presumed to be outside the purview of ....
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....n the food processing / beverages industry. Besides, it also leases industrial packaging machinery and supply spare parts thereof. The Assessing Officer vide its order passed u/s.115WE of I.T. Act determining the total fringe benefits for the assessment year 2006-07, made an addition of Rs. 5,90,88,699/-. The matter was carried before first appellate authority, wherein the various contentions were raised on behalf of assessee and having considered the same, the CIT(A) granted partial relief to the assessee. 4.2 As stated above, the assessee is not pressing the issues with regard to "Travelling and Conveyance" "Conference", "Sales Promotion'', "Use of hotel, boarding and lodging facilities" and "Use of telephone". Thus, the only issue of market support system survives. In this regard, the learned Authorized Representative has submitted that the CIT(A) erred in sustaining the part of addition made in respect of market support service without appreciating that the entire market support expenditure was not liable to FBT. The assessee has incurred such expenses which are basically reimbursement of the expenses incurred by customers on advertisement and sale promotions. The asse....
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....ovision for market support) Rs. 2,73,97,192/- d Reversal of provisions for market support made in earlier years (Rs. 12,09,443/-) Total Rs. 10,07,83,024/- 4.4 As stated above, the Assessing Officer has held that the market support expenditure is liable for FBT. According to him, the expenses are incurred on advertisement and publicity and therefore, such expenses are covered u/s.115WB(D). Accordingly, he has taxed the entire amount of Rs. 10,78,83,024/- as liable to FBT. 4.5 In appeal, the CIT(A) has partly accepted the contention of the assessee. According to him, the expenditure which was in the nature of discount and advertisements are not liable to FBT. The CIT(A) has further held that the expenditure on brand building, marketing and sales promotion is liable to FBT. Thus, out of the total amount of Rs. 10,78,83,023/-, the CIT(A) has given part relief as under:- Sr. No. Nature of the expenditure Amount (Rs.) Decision of learned CIT(A) i Discount 2,90,54,959/- Not liable to FBT ii Brand Building, Marketing & Promotion 2,73,52,498/- Liable to FBT iii Advertisement 2,52,87,818/- Not liable to FBT iv Sales Promotion 2,61,87,749/- Liable to FBT B....
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....rs as per agreement. There is nothing on record to suggest that market support expenditure has been incurred for the benefit of employees of the assessee in any manner. The same has been paid to the customers on account of reimbursement of advertisement and sales promotions expenses as per agreement. So, it is not justified to attract the provisions of FBT in respect of such payments. This is not applicable to the payment to third party which does not result in any benefit to employees of the assessee, so the same should not be chargeable to fringe benefits tax u/s.115WB. 4.9 We find that the Hon'ble Delhi High Court in the case of T & T Motors Ltd. Vs. Asst. CIT (2012) 341 ITR 332 (Del) has held that a careful reading of clauses (i) to (viii) elucidates that the legislation has excluded from FBT, the expenditure in the form of payments to third parties and therefore, fringe benefit tax is to be levied only in the case of expenditure incurred collectively on employees. According to us, as per the definition of fringe benefit contained in section 115WB(1), the fringe benefit would include only those expenses which are incurred by employer in the course of his business in considerat....