2018 (2) TMI 436

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.... for the Assessment Year 2008-09. 2. The assessee has raised following grounds of appeal: 1. For that on the facts and in the circumstances the Learned Commissioner of Income Tax (Appeals) wrongly and arbitrarily confirmed the addition of Rs. 7,91,147 [being 113 (one third) of the total expenditure of Rs. 23,73,442/-] as 'not being incurred for business". 2. For that the Learned Commissioner of Income Tax (Appeals) further erred in not considering the fact that the value of Fringe Benefit Tax [FBT] of Rs. 7,03,886/- [comprising 20% of Rs. 16,09,447/- and 50% of Rs. 7,63,995/-] was disclosed in the return under the head Sales Promotion and Gift and offered for tax accordingly. 3. For that on the fact and in the circumstances the....

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....nd loss account on account of sales promotion expenses and gift and presentation articles to doctors respectively. The assessee was asked to furnish the details of the same together with justification for claiming the same as business expenditure. The assessee could not file the details properly before the ld. AO. The assessee instead filed ledger extracts to show that certain gift articles were purchased by it to serve its purpose towards so-called sales promotion expenses and gift and presentation articles to doctors. Sample bills were also produced for verification of the ld. AO. The Ld. AO observed that the assessee did not give any details of the end beneficiaries or ultimate beneficiaries nor it could explain as to how the gift articl....

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....native argument of the assessee and upheld the action of the ld. AO. Aggrieved, the assessee is in appeal before us. 4. The Ld. AR fairly pleaded that when a particular item of expenditure has been disallowed by the Ld. AO as not incurred wholly and exclusively for the purpose of business u/s 37 of the Act, then the same should not be subjected to levy of fringe benefit tax i.e. FBT in the FBT computation. He fairly pleaded that what is to be considered in the FBT computation is only allowable business expenses of the assessee. He placed reliance on the CBDT Circular No. 8/2005 dated 29.08.2005 in this regard apart from placing reliance on the assessment order framed on the very same lines for the assessment year 2007-08 in the case of the....

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....chargeable under the head profits and gains of business or profession. Accordingly, any expenditure that is incurred for personal purposes is not allowable as deduction. Sub-section (2) of section 115WB provides for a levy on fringe benefits estimated on a presumptive basis using certain expenses as a measure. To the extent the expenses incurred by the employer are personal in nature and have, therefore, been disallowed under section 37 of the Income Tax act, such disallowance would not be liable to FBT. For example, let us assume a firm, being an employer, has incurred an expenditure of Rs. 100 towards tour and travel, of which Rs. 40, is personal in nature. Therefore, the amount of Rs. 40, being personal in nature, will be disallowed unde....