TaxTMI 
TaxTMI 
2015 (5) TMI 506
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....st of Free Samples given to Doctors (in the nature of Sales Promotion) 7,24,41,000 20% 1,44,88,200 D Expenditure on Gifts to Business Associates (not being employees) 17,33,767 50% 8,66,884 E Club Membership Fees 72,450 50% 36,225 F Reimbursement of Medical Expenses (uptoRs. 15,000) 3,36,74,477 20% 67,34,895 Total 8,45,98,925 2. That the learned CIT(A) erred in law and on facts in rejecting the appellant's contention that since the expenditure referred to in A to E above having been incurred by the appellant purely for its business purposes, the same did not result in any benefit to its employees and hence it was not liable to the levy of Fringe benefits Tax (FBT). 3. That the learned CIT(A) further erred in law and on facts in rejecting the contention that since the expenditure referred to in F above being in the nature of an exempt perquisite u/s. 17 of the I.T. Act, the same was not liable to the levy of Fringe benefits Tax (FBT). 4. That the learned CIT(A) failed to appreciate the merits of the appellant's elaborate submissions that keeping in view the Finance Minister's Budget....
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....enefits are also deemed at a particular percentage, there is hardly any discretion either with appellant or with the Tax Department to reduce the levy of Fringe benefits Tax. Since, the provision and sections are very clear and there is no room for any confusion, the linking of the expenses to the benefit of employee is not necessary. Any expenses which is directly incurred for the purpose of employee, is fully taken for the purpose of Fringe benefits Tax. However, other expenses in the nature of entertainment, sale promotion, conveyance , travelling, gifts etc. may have partial benefit to the employees and therefore, only a part is treated as Fringe benefits. Since, section clearly defined the value of Fringe benefits, no further adjustment to the items of expenses debited in profit and loss account is permitted and accordingly Assessing Officer is justified in applying the rates given in the act to arrive at the value of Fringe benefits. The decision in the order of Hon'ble Gujarat High Court does not put any stay on the assessment or appeal proceeding in this matter. It only prescribes the mode of payment of Fringe benefits Tax till appeal is disposed off. Since there is no ....
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....ity : Provided that any expenditure on advertisement,- (i) being the expenditure (including rental) on advertisement of any form in any print (including journals, catalogues or price lists) or electronic media or transport system; (ii) being the expenditure on the holding of, or the participation in, any press conference or business convention, fair or exhibition; (iii) being the expenditure on sponsorship of any sports event or any other event organised by any Government agency or trade association or body ; (iv) being the expenditure on the publication in any print or electronic media of any notice required to be published by or under any law or by an order of a court or Tribunal; (v) being the expenditure on advertisement by way of signs, art work, painting, banners, awnings, direct mail, electric spectaculars, kiosks, hoardings, bill boards (display of products) or by way of such other medium of advertisement; (vi) being the expenditure by way of payment to any advertising agency for the purposes of clauses (i) to (v) above; (vii) being the expenditure on distribution of samples either free of cost or at concessional rate ; and (viii) being the expend....
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.... practice of providing perquisites, wherein many perquisites are disguised as reimbursements or other miscellaneous expenses so as to enable the employees to escape/ reduce their tax liability ; and : (c) of the difficulty in the valuation of the benefits. 2.2 In India, prior to the assessment year 1998-99, some perquisites/fringe benefits were included in salary in terms of section 17 and accordingly taxed under section 15 of the Income-tax Act in the hands of the employee and a large number of fringe benefits were taxed by the employer- based disallowance method where the quantum of the disallowance was estimated on a presumptive basis. In practice, taxation of fringe benefits by the employer- based disallowance method resulted in large-scale litigation on account of ambiguity in defining the tax base. Therefore, the taxation of fringe benefits by the employer- based disallowance method was withdrawn by the Finance Act, 1997. However, the withdrawal of the provisions relating to taxation of fringe benefits by the employer-based disallowance method resulted in significant erosion of the tax base. The Finance Act, 2005 has introduced a new levy, namely, the fringe benefits ta....
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.... and there is no employer-employee relationship between the assessee and the recipient. Therefore, the Circular of the Central Board of Direct Taxes as well as the decision of the hon'ble apex court in the case of R & B Falcon (A) (P.) Ltd. (supra) would be squarely applicable. Moreover, the hon'ble jurisdictional High Court in the case of T & T Motors Ltd. (supra) has stated that in respect of payment to third persons, fringe benefits tax is not applicable because no fringe benefits is enjoyed by the employee/recipient. The ratio of the above decision of the hon'ble jurisdictional High Court would also be squarely applicable to the facts of the assessee's case because payment had been made for channel placement. By such payment, no fringe benefits is enjoyed by the employee/recipient. The payment is in the nature of expenditure incurred for the purpose of business by the assessee and in the hands of the recipient, the expenditure is taxable as income. Moreover, the expenditure incurred by the assessee is not in the nature of expenditure for sales promotion. The assessee has incurred the expenditure for broadcasting of its channels on the desired bands. Therefore, the expenditu....