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TMI Blog2013 (7) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Gupta, CA. For the Respondent : Shri A. K. Mishra, CIT-DR. ORDER Per G. D. Agrawal, VP :- These three appeals by the assessee are directed against the orders dated 2nd February, 2010, 2. In all these three appeals by the assessee, the only ground raised is about the chargeability of Fringe Benefit Tax (FBT) on channel placement charges. The amount of channel placement charges paid by the assessee in the years under appeal is as under:- Assessment Year Amount 2006-07 ₹ 11,56,32,046/- 2007-08 ₹ 26,52,71,827/- 2008-09 ₹ 37,09,63,828/- 3. At the time of hearing before us, it is stated by the learned counsel that the assessee company is broadcasting news through its four news channels, viz., Aaj Tak, Headlines Today, Dilli Aaj Tak and Tez. That during the years under consideration, the assessee was chargeable to tax in respect of fringe benefits for which the assessee had filed the returns of all the years under appeal. That the Assessing Officer made the addition of the expenses in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion where the Government has provided the levy of fringe benefit in respect of the expenses mentioned therein. That clause (d) of Section 115WB(2) provides sales promotion including publicity. That the Assessing Officer as well as learned CIT(A) has clearly mentioned that the assessee has incurred the expenditure for getting the place in prime band because by this way, channel is noticed and more revenue is generated through advertisement leading to better revenue for the channel. Thus, the expenditure was incurred by the assessee for promoting its channels which is certainly in the nature of sales promotion. In support of this contention, he relied upon the following decisions:- (i) CIT Vs. Zippers India - [2006] 284 ITR 142 (Guj). (ii) CIT Vs. Print System Products - [2000] 243 ITR 8 (Madras). (iii) CIT Vs. Lakhanpal National Ltd. - [2007] 292 ITR 167 (Guj). (iv) CIT Vs. Bata India Ltd. - [1993] 201 ITR 884 (Calcutta). 6. We have carefully considered the arguments of both the sides and perused the material placed before us. Fringe Benefit Tax was levied for the first time by the Finance Act, 2005 by introducing Chapter XII-H i.e. Sections 115W to 115WL to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on including publicity. Proviso to above clause excludes various types of expenditure on advertisement from the purview of clause (d). The assessee has argued that neither there is an employer- employee relationship nor the expenditure is in the nature of sales promotion and publicity. In contrast, the learned CIT-DR has stated that if the expenditure as provided in any of the clauses of Section 115WB(2) is incurred by the assessee, the fringe benefit tax would be chargeable, whether or not there is an employer-employee relationship. In this regard, we find that the CBDT has issued Circular No.8 dated 29th August, 2005 which is published in 277 ITR (Statutes) 20. In paragraph 2 of the Circular, objective for introduction of fringe benefit tax is explained which reads as under:- 2. Objective 2.1 The taxation of perquisites or fringe benefits is justified both on grounds of equity and economic efficiency. When fringe benefits are undertaxed, it violates both horizontal and vertical equity. A taxpayer receiving his entire income in cash bears a higher tax burden in comparison to another taxpayer who receives his income partly in cash and partly in kind, thereby violating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above Circular in the case of R B Falcon (A) Pty.Ltd. (supra) and held as under:- The interpretation of the CBDT in its circulars being in the realm of executive construction, should primarily be held to be binding, save and except where it violates any provisions of law or is contrary to any judgment rendered by the courts. The reason for giving effect to such executive construction is not only the same as contemporaneous which would come within the purview of the maxim temporania caste pesto, even in a certain situation a representation made by an authority like the Minister presenting the Bill before Parliament may also be found bound thereby. Where a representation is made by the maker of legislation at the time of introduction of the Bill or construction thereupon is put by the executive on its coming into force the same carries great weight. 10. That the Hon'ble Jurisdictional High Court has also expressed the similar view in the case of T T Motors Ltd. and held as under:- A careful reading of clauses (i), (ii), (iv), (v), (vi) and (vii) of section 115WB(2)(D) elucidates that the Legislature has excluded from fringe benefit expenditure in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture. In the case of Lakhanpal National Ltd. (supra), Hon'ble Gujarat High Court held that the incentive paid to the sales representatives of the distributors was for the services rendered by them and cannot be considered as expenditure on sales promotion. In the case of Bata India Ltd. (supra), Hon'ble Calcutta High Court held that the discount allowed to wholesale dealers and commission paid to selling agent is not the sales promotion expenditure. Thus, all the four decisions relied upon by the learned DR do not support the case of the Revenue. 13. In view of the above, respectfully following the Circular of the CBDT (supra), the decision of Hon'ble Apex Court in the case of R B Falcon (A) Pty.Ltd. (supra) and of Hon'ble Jurisdictional High Court in the case of T T Motors Ltd. (supra), we hold that the channel placement charges cannot be held to be the expenditure on sales promotion or publicity. Therefore, the same cannot be charged to FBT. We, therefore, allow the assessee's appeals for all the three years. 14. In the result, the appeals of the assessee are allowed. Decision pronounced in the open Court on 12th July, 2013. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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