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TMI Blog2016 (6) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... plied his mind to the expenditure incurred on dealers training and non-application of mind to a particular issue which results into loss to the revenue makes the assessment order to be erroneous and prejudicial to the interests of revenue. We are of the view that where as per the provisions of the Act and clarification issued by the CBDT through Instruction No.8/2005, the dealers training expenses would be the fringe benefits and subjected to tax in the hands of the assessee, the AO is required to at least examine the nature of dealers training expenditure. Since he did not examine this aspect, we have no hesitation to hold that the assessment order is erroneous and prejudicial to the interests of revenue in this regard. Conference expenses AO has not examined this aspect also either in the assessment order or by raising a specific query in this regard; whereas as per Q.No.55 & 56 of the Instruction No.8/2005, it has been clarified by the Board that the expenditure in the nature of fee for participation by the employees in any conference is not liable to FBT, but if the participation fee includes any expenditure of the nature referred to in clauses (A), (B) and (D) to (P) of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudicial to the interests of the revenue. 2. The grounds raised by the assessee assailing the order of the CIT inter alia are as under:- 1.1 The learned Commissioner of Income tax. LTU, Bangalore has erred in passing the order under section 263 in the mariner passed by him. The conditions precedent for exercise of jurisdiction wider section 263 not having been satisfied, the order passed under section 263 is bad in law and liable to be quashed. 2.1 The learned Commissioner of Income tax. LTU Bangalore has erred in passing the order under section 263 without satisfying as to how the order Passed under section 143(3) is erroneous in so far it is prejudicial to the interest of the revenue. The order so passed is bad in law and liable to be quashed. 3.1 Without prejudice, the learned Commissioner of Income tax, LTU, Bangalore has erred in passing the order under section 263 dated 12.3.2013 in respect of such matters as had been considered and decided by the learned CIT(A) vide order dated 30.11.2010 for the same assessment year i.e AY 2008-09. The order so passed under section 263 being contrary to the provisions of Explanation (c) to section 263(1) is bad in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out by the AO during the course of assessment proceedings. In support thereof, he has invited our attention to the documents appearing at page Nos. 42 to 75 of the compilation of the assessee. 5. The ld. counsel for the assessee further submitted that once the AO has applied his mind and examined all the issues pointed out by the CIT, no revision u/s. 263 of the Act is possible on account of change of opinion. It was further contended that it is settled position of law that the AO is not required to adjudicate by passing a speaking order on all issues on which he is satisfied with the explanation of the assessee. Therefore, the CIT has not exercised his jurisdiction u/s. 263 properly and his order deserves to be set aside. In support of his contentions, he has placed reliance upon the judgment of the Hon ble High Court of Karnataka in the case of Sun Micro Systems India Pvt. Ltd. in ITA No.203 of 2009; CIT v. Saravana Developers in ITA No.68/2014 c/w 67/2014. 6. Per contra, the ld. DR has emphatically contended that CIT has exercised his jurisdiction u/s. 263 of the Act with respect to the 5 points on which the AO has not applied his mind. He further placed reliance upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to fringe benefits, a query was raised with respect to expenditure incurred in connection with sales promotion, conveyance, tour and travel and gifts only. No query was raised with respect to an amount of ₹ 8,97,920 for medical reimbursement expenses, an amount of ₹ 6,45,32,048 for dealer training expenses and the conference expenses shown at ₹ 230,64,748. With respect to business promotion expenses and sales promotion expenses, it can be said that a specific query was raised by the AO through his letter dated 19.4.2010. We have also carefully examined the assessment order and find that in the assessment order also, the AO has made great deliberations on sales promotion expenses, conveyance, tour travel and gift, but no deliberation has been made with respect to the reimbursement of medical expenses, dealer training expenditure and the conference expenses. 8. During the course of hearing of the appeal also, a specific query was raised, whether any query was raised with respect to the medical reimbursement expenses, dealer training expenditure and conference expenses, but no satisfactory reply was offered on behalf of the assessee. In the light of the docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efits and sub-section (1) refers to the specific fringe benefits provided by the employer to the employees, whereas sub-section (2) provides that fringe benefits shall be deemed to have been provided by the employer to his employees if the employer incurs any expense on or makes any payment for the purposes enumerated in clauses (A) to (P); meaning thereby, if the assessee incurs certain expenditure on dealers training, etc., the expenditure incurred would be the fringe benefits in the hands of the assessee. It has also been made clear by the Tribunal through its order in the case of ICICI Prudential Life Insurance Co. Ltd. v. ACIT (supra) by holding that the language of section 115WB is clear, unambiguous and straight and there is no place for insertion or subtraction or substitution of any word into it. A careful reading of the entire section reveals without any doubt that sub-section (2) is an independent section and is not controlled by sub-section (1) and both sub-section (1) and sub-section (2) operate in a different field. Any inference that sub-section (2) is controlled by subsection (1) and any expenditure which is not a consideration for employment as mentioned under dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or adverse to the interest of the assessee and there is no need for the assessing authority to spell out reasons when the order is accepting the claim of the assessee, to accept a submission of this nature would be to give a free hand to the assessing authority just to pass order without reasoning and to spell out reasons only in a situation where the finding is to be against the assessee or any claim put forth by the assessee is denied. Their Lordships further held that there cannot be any dichotomy of this nature as every conclusion and finding by the assessing authority should be supported by reasons, however, brief it may be, as in a situation where it is only a question of computation in accordance with relevant articles of a Double Taxation Avoidance Agreements, it should be clearly indicated in the order of the assessing authority, whether or not the assessee had given particulars or details of it. It is the duty of the assessing authority to do that and if the assessing authority had failed in that, more so in extending a tax relief to the assessee, the order definitely constitutes an order not merely erroneous but also prejudicial to the interest of the revenue and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, we find that a specific query was raised by the AO in this regard and the assessee has filed a detailed reply in response thereto. Not only in the course of assessment proceedings, the AO has also examined this issue in the assessment order in para Nos. 2 to 3, after making a detailed discussion with respect to the relevant provision and the nature of this expenditure. Out of a total claim of ₹ 2,66,50,000, a sum of ₹ 1,58,9,000 was charged to FBT. On a careful perusal of the assessment order, we find that the AO has examined this issue and assessed to FBT an amount of ₹ 1,58,95,000 out of total claim of ₹ 2,66,50,000. Though the CIT may not agree with the conclusions and the findings of AO, but in any case, the AO has applied his mind to the issue and the CIT cannot thrust upon his opinion upon the AO. Therefore, in this regard, we are of the view that since the AO has applied his mind and examined the issue, the CIT has no jurisdiction to revise the order u/s. 263 of the Act. Therefore, on this issue, we set aside the order of CIT. 16. Accordingly, the appeal is disposed of and we confirm the order of CIT with respect to reimbursement of medical exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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