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2017 (4) TMI 657 - ITAT VISAKHAPATNAMFringe benefit tax - sales promotion expenses - proof of employer and employee relationship between the payer and recipient - Held that:- The assessee has incurred sales promotion expenditure in the nature of trade schemes and discounts, which is paid to the retail traders based on the quantity of stock purchased from M/s. A.P. State Beverages Corporation Limited and directly paid to the retail traders in the form of reduction in selling price. We further noticed that clause (d) of sub section (2) makes it clear that any sales promotion expenditure incurred by the assessee in the nature of payment to any person of repute for promoting the sale of goods or services of the business of the employer, then such expenditure shall not be considered as expenditure on sales promotion including publicity. The assessee has incurred sales promotion expenditure, which is directly paid to the retail traders. In the absence of employer and employee relationship between the payer and recipient, the question of applicability of fringe benefits on sales promotion expenses does not arise. We further noticed that the CBDT has issued a circular vide circular no.8 of 2005 dated 29.8.2005, to clarify the applicability of fringe benefits tax on sales promotion expenses and sales promotion includes sales discounts or rebates to wholesalers or customers and while answering question nos.58 and 60, clarified that brokerage and selling commission paid for selling goods is not expenditure for the purpose of sales promotion including publicity within the meaning of clause (d) of sub section (2) of section 115WB of the Act. The Board further clarifies that sales discount or rebates allowed to wholesale dealers or customers are in the nature of selling expenses and outside the scope of the provisions of clause (d) of sub section (2) of section 115WB of the Act. Therefore, we are of the view that any expenditure incurred is in the nature of sales promotion and publicity, which is incurred for promoting the sale of goods or services is outside the purview of the fringe benefit tax. The CIT(A) after considering the relevant facts has rightly deleted additions made by the A.O. - Decided against revenue
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