2022 (6) TMI 443 - AT - Income Tax

Fringe benefit on account of advertisement expenses - assessee had failed to submit complete documentary evidence which can prove that the expenditure falls within the purview of proviso to section 115W(2)(d) - HELD THAT - We find ourselves in agreement with the proposition that the issue stands covered in favour of the assessee by the earlier as well as subsequent decision of the ITAT. For the present year, the matter was remanded to the assessing officer as complete details were not available. Now it is not the case of the Revenue that the details are not available. Rather the AO has repeated the disallowance without specifying as to what is the defect in the assessee's claim in detail. In this view of the matter, we do not find any infirmity in the order of ld. CIT(A). Hence we uphold the same. Revenue appeal dismissed.

Summary

Issues:
- Addition of Rs. 7,87,29,594 to fringe benefit on account of advertisement expenses.
- Failure to submit complete documentary evidence to prove expenses fall within the purview of section 115W(2)(d) of the Income Tax Act, 1961.

Analysis:
1. The appeal by the revenue challenged the deletion of the addition of Rs. 7,87,29,594 to fringe benefit on account of advertisement expenses for the assessment year 2007-08. The assessee, engaged in the business of non-alcoholic beverages, initially filed a return of Fringe Benefit Tax (FBT) declaring the value of Fringe Benefits at Rs. 10,19,79,612. The assessment was completed with adjustments, leading to an increased Fringe Benefit value of Rs. 18,44,29,053. The primary dispute revolved around the advertisement expenses and whether they qualified for exemption under section 115W(2)(d) of the Act.

2. The CIT(A) dismissed the appeal of the Appellant, emphasizing the lack of adequate details provided by the assessee to support the claim that the expenses were not liable to FBT. The ITAT partially allowed the appeal, remanding the matter back to the AO for fresh adjudication specifically concerning expenses under 'Advertisement, Publicity, and Sales Promotion'.

3. Subsequent to the ITAT order, the assessing officer reiterated the disallowance of the advertisement expenses, stating that the expenses were liable for FBT. The assessee appealed before the ld. CIT(A) arguing that the AO rejected the claim without specifying any legal merits or logical reasoning. The ld. CIT(A) noted that the issue was similar to a previous year where the ITAT had decided in favor of the appellant, allowing the appeal on grounds related to the advertisement expenses.

4. The Revenue appealed the ld. CIT(A)'s order, contending that the order was reversed without proper examination of submissions. The counsel for the assessee argued that the issue was favorably decided by the ITAT in previous and subsequent years. The assessing officer had rejected the claim without pointing out any defects in the submissions. The ld. counsel highlighted that the ITAT had not made any adverse comments on the available details, and the ld. CIT(A) had duly considered the submissions before allowing the claim.

5. The Tribunal upheld the ld. CIT(A)'s order, noting that the issue was covered in favor of the assessee by previous ITAT decisions. The matter was remanded to the assessing officer due to incomplete details, which were subsequently provided. The Tribunal found no defect in the assessee's claim and dismissed the Revenue's appeal, affirming the ld. CIT(A)'s decision.

In conclusion, the Tribunal upheld the decision of the ld. CIT(A) to delete the addition of advertisement expenses to fringe benefits, as the issue was deemed to be covered in favor of the assessee by previous ITAT decisions, and the assessing officer failed to identify any specific defects in the assessee's submissions.