2014 (11) TMI 339 - AT - Income Tax

Addition to the value of FBT made CBDT instructions appreciated or not Conference fee paid - Held that - As decided in assessee s own case for the earlier assessment year, it has been held that the claim of the assessee that this expenses was related to fees paid for the employees to participate in the exhibition held at Japan - this expenditure is exempt from FBT by virtue of Sec, 115WB(2)(C) because the provisions of the act provides that fees for participation by the employees in any conference is exempt - apparently the facts with respect to the nature of expenditure incurred by the assessee do not clearly emerge from the order of the AO - thus, the matter is remitted back to the AO for verification. Exclusion of Trade mark fee and Sales promotion expenses - Held that - The nature of expenditure incurred by the assessee is also not clearly brought out in the order of AO in order to determine the relevant provisions of the Act which could be invoked to bring the expenses under the net of FBT - thus, the matter is remitted back to the AO for verification. Foreign maintenance allowance and staff training expenses Held that - CIT(A) has categorically made a finding that these expenditures also includes boarding and lodging - the correct and full classification of expenditure is not split and made clear, and thus the relevant provisions of the Act that should be invoked to the relevant expenditure is also not stated in the order thus, the matter is remitted back to the AO for fresh consideration revenue could not bring anything contrary, thus, the order of the CIT(A) is upheld Decided in favour of assessee.

Summary

Issues:
- Disallowance of FBT on various expenses
- Failure to consider submissions and follow CBDT instructions
- Disagreement with CIT(A) following predecessor's decision

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of Fringe Benefit Tax (FBT) on expenses for A.Y. 2007-08. The Assessing Officer disallowed FBT on sales promotion, traveling expenses, and conference expenses, citing similarities with the previous year's decision. The CIT(A) upheld the disallowance partially, following the previous year's order for A.Y. 06-07.

2. The Appellate Tribunal noted that the issue was covered by a previous ITAT order for A.Y. 2006-07, where certain expenses were found not liable for FBT. The Tribunal remitted the issue back to the Assessing Officer for verification and appropriate decision as per law for expenses related to sales promotion, traveling, and conference.

3. Regarding foreign maintenance and staff training expenses, the CIT(A) found them applicable for FBT, but the classification of expenditure was unclear. The Tribunal remitted this issue back to the Assessing Officer for a clear determination and fresh consideration.

4. The Tribunal directed the Assessing Officer to decide on the values of FBT for sales promotion, travel expenses, and conference expenses after providing an opportunity for the assessee to be heard. The issue of interest was deemed consequential, and the Assessing Officer was instructed accordingly.

5. Ultimately, the appeal by the assessee was allowed for statistical purposes, and the decision was pronounced in open court on October 29, 2014.