TaxTMI 
TaxTMI 
2024 (2) TMI 1104
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....O") in charging Fringe Benefit Tax ("FBT") on business promotion expenses including KAM expenses, CRM expenses and conference and meeting expenses of Rs. 6,53,14,002/- and gift articles of Rs. 5,23,27,089/- u/s 115WB(2)(d) & 115WB(2)(o) of the Income Tax Act, 1961, ("the Act") respectively, treating the same as deemed fringe benefit accorded to the employees of the Appellant. 2. She further erred in holding that Appellant had not submitted any documents which could substantiate that expenditure was incurred on non-employees. 3. She failed to appreciate and ought to have held that since aforesaid expenditure were incurred on non-employees in course of Appellant's business, the same were not liable to FBT. 4. The Appellant, therefore, prays that the AO be directed to delete the aforesaid additions made u/s 115WB(2) (d) & 115WB(2)(o) of the Act. GROUND II: The Appellant craves leaves to add to, alter and / or delete the above ground of appeal." 3. The brief facts of the case, as emanating from the record, are: For the year under consideration, the assessee filed its fringe benefit return under section 115WD(1) of the Act on 21/10/200....
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....e material available on record. The only dispute raised by the assessee, in the present appeal, is against charging of Fringe Benefit Tax ("FBT") on business promotion expenses by treating the same as fringe benefit accorded by the assessee to its employees. As per the assessee, the expenses debited under the head "Advertisement and Business Promotion" and considered by the AO to be covered under section 115WB(2)(d) and section 115WB(2)(o) of the Act are not incurred on its employees and rather the same has been incurred on the Doctors. In this regard, the assessee made the following submissions during the assessment proceedings:- "i) As regards the above amount of Rs. 60795906/- under the head business promotion expenditure, the assessee has merely made a statement that this is expenditure incurred on non-employees. ii) As regards KAM exp., it is for promotion of ICCU, Range of products i.e. Aggri block, LMWX, Dobutrex & Stromix. These type of expenses include payments made to people in the field for some promotional activities, like taking the group of doctors out for dinner, sponsoring their conference to ensure doctors spent time with our field managers and pr....
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....to ensure that the same is allowable u/s.37(1) of the Act. As the assesses was not able to substantiate the claim, the AO made an addition of Rs.11,76,41,050/-. 3) At the appellate stage, the assessee requested for one more opportunity to be given to verify his claim. In this regard, assessee was given an opportunity to file detail regarding the above claim. 4) Vide order sheet noting dated 01-08-2012, 10-08-2012 and 24-08-2012, assessee filed details of expenses, voucher, etc to substantiate its claim. The same were examined and verified on test check basis. It is seen from the details furnished that the expense under the head CRM/KAM are incurred by field staff for giving various gifts, travel facility etc to the doctors for promoting their products. In this regard it is stated that the above gift & other benefits given to doctors are in violation of the regulation issued by Medical Council of India. Thus the claim of any expense incurred in providing above mentioned or similar freebees in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics.) Regulations, 2002 is inadmissible under section 37/11 of the incom....
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....ployees. As alluded to herein above, for levy of fringe benefit tax, relationship of employer and employees is the sine qua non and the fringe benefits has to be provided by the employer to the employees in the course of such relationship. 14. Tata Consultancy Services Lad (upra), this Court referred to Circular No. 8/2005 of CBDT which andicated that the objective of taxing perquisite of fringe benefit is both on the ground of equity and economic efficiency. Thereafter, this Court held that the basis of fringe benefit tax is the benefit or perquisite which emanates out of an employer-employee relationship which is a pre-requisite for levy of fringe benefit tax. 15. Having noticed this Court's order in Tata Consultancy Services Ltd (supra), we may now advert to the order passed by the Tribunal dated 25-1-2017, relevant portion of which is extracted here-under- "7. We have carefully considered the rival submissions. The relevant facts are that the assessee is engaged in the business of manufacture of pharmaceutical products of various types. In its business, assessee distributes free samples to Doctors and others and the claim of assessee was that such....