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TMI Blog2014 (11) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... 3422/Ahd/2010 - - - Dated:- 31-10-2014 - Sri Anil Chaturvedi And Shri Kul Bharat,JJ. For the Petitioner : Sri S.N. Soparkar, A.R. For the Respondent : Sri Roop Chand, Sr.D.R. ORDER Per : Anil Chaturvedi, Accountant Member:- These are the assessee s appeals against the order of Ld. CIT(A)-I, Baroda dated 28-10-2010 for A.Y. 2006-07 2007-08 respectively. 2. Before us both the parties submitted that though the issue relates to 2 different years but the facts and issue involved in both the years are identical except for the assessment year involved and the amounts. It was therefore submitted that the submission made by them in case of one assessment year would be equally applicable to the other. We therefore proceed to dispose of both the appeals by way of a consolidated order for the sake of convenience and thus proceed with the facts for AY 06-07 in ITA No. 3421/Ahd/2010. 3. The facts as culled out from the material on record are as under. 4. Assessee is a company stated to be engaged in the business of manufacturing and trading of pharmaceutical products. Assessee electronically filed return of Fringe Benefit tax (FBT) for AY 06-07 on 19.12.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses. 4.2 Without prejudice to the above, the learned CIT (A) ought to have allowed the expenditure included in above for lodging boarding, which are liable to FBT at concessional rate of 5% u/s 115WC(2)(c). 5. Addition of sample expenses to value of fringe benefits u/s 115WB (2) ₹ 44,43,762/-: 5.1 On the facts and circumstances of the case and in law, the learned CIT (A) ought to have considered that amendment to S.115WB(2)(D)(vii) w.e.f . 1.4.2007 is to remove to hardship caused to the Assessee and thus is clarificatory in nature and ought to be considered as retrospective in nature. 6. Addition of other sales promotion expenses to value of fringe benefits u/s 115 WB (2) ₹ 18.40 Lacs/-: 6.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in considering expenditure of ₹ 39.67 lakhs on doctors meet, ₹ 50.84 lakhs on other sales promotion expenditure through C F agents, ₹ 1.51 lakhs on corporate gifts to customers and doctors as liable to FBT. 7. Addition of telephone expenses to value of fringe benefits u/s. 115 WB (2) ₹ 43,45,988/-: 7.1 On the facts and circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s expenses (as listed at page 19 of the order) and reworked the fringe benefit value. Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A) who vide order dated 28/10/2010 granted partial relief to the Assessee by holding as under: 7.3 A conjoint reading of the rationale behind the levy, the provisions of the Act and the questions and answers detailed in the circular elaborate the scope of fringe benefits provided and deemed to have been provided as defined in section 115WB. Sub-section (1) of the said section defines the scope of fringe benefits provided by the employer to his employees. Similarly, sub-section (2) of the said section defines the scope of fringe benefits deemed to have been provided by the employer to his employees. Therefore, sub-section (2) expands the scope of sub-section (1) through a deeming provision. The provision relating to the computation of the value of the fringe benefits is contained in section 115WC. I am in partial agreement with the appellant that fringe benefit tax payable by the employer was due to inherent difficulty in isolating the personal element wherever there is collective enjoyment of such benefits directly or ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory provision which is plain and unambiguous cannot be the subject of an interpretation interfering with the plain meaning [Padmasundrarao v State of Tamil Nadu, 255 ITR 147 (SC)]. Also in the case of Pandian Chemicals Ltd vs. CIT [2003] 262 ITR 278 (SC) it is held that rules of interpretation would come into play only if there is any doubt with regard to the express language used in the provision. Where the words are unequivocal, there is no scope for importing the rule of liberal interpretation. I could empathize with ld. AR that the basis of selection of the purposes in sec. 115WB(2) could be a hotly debatable issue on grounds of inequity but once the bases are provided in the Act passed by the Parliament, the provisions are to be mechanically followed. In view of above, the legal pleas of the appellant are only partially accepted. 7.5 Coming to the merits of specific disallowances, the steps to be followed are (i) Whether expenses fall under sac.115WB(1)/115WB(2). (ii) Whether the expenses are covered partially or fully under exclusion clauses in sec. 115WB(2)/1l5WB(3). (iii) Whether the fringe benefit value qualify for lower taxation in view of section 115WC. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion expenditure through C F agents and corporate gift to customers and doctors of ₹ 1.51 lakhs have been rightly considered as falling within the purview of FBT by AO. Expenditure of ₹ 12.97 lakhs towards banners and advertisements and displays and ₹ 4 lakhs on advertising campaign and ₹ 0.1 lakh on diabetic camps are allowable exclusions under clause (D). 7.10 In regard to export promotion expenses of ₹ 33.98 lakhs I am in agreement with the appellant that in view of Q. No.20 of the circular if the company maintains separate books of account for its Indian and foreign operations, FBT would be payable on the amount of expenses reflected in the books of account relating to the Indian operations. The appellant is directed to provide the necessary details to the AO to emphasize that it is covered under the circular. Failing which, the incentives/sale commission expenditure on literature/advertisement/exhibition are allowable exclusions but the expenditure on gift and entertainment are covered under clause (A) and in terms of Q.No. 97 98 of the Circular. The ground is allowed subject to verification by AO. 7.11 In view of above ground No. 4, 5, 7, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of the expression fringe benefits contained therein is for the purposes of this Chapter.... and, therefore, it implies that the overriding condition of the incurrence of expenditure in consideration for employment is even relevant for the purposes of assessing or ascertaining fringe benefits, which are deemed to have been provided by the employer to its employees in terms of sub section (2) of s. 115WB of the Act also. Therefore even in the circumstances provided in subsection (2) of s. 115WB of the Act fringe benefits can be deemed to have been provided by the employer to his employees, only in cases where the prescribed expenditure is incurred in consideration for employment. Therefore, on this aspect, there is ample force in the plea set up by the assessee and accordingly, the assessee is liable to succeed. 9. Before us, Revenue has not brought any binding contrary decision in its support and further has not placed any material on record to controvert the submissions made by the Assessee that various expenses were not incurred for collective benefit of the employees. In view of the aforesaid facts, we are of the view that no addition on account of FBT can be made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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