TMI Blog2013 (4) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... tice, the appeal was filed which was delayed by 35 days. After hearing the learned Departmental Representative, in the interest of justice, delay for both the appeals are condoned. ITA No. 146/A/2011 - A.Y. 2008-09 3. The assessee has raised as many as 5 grounds of appeal but the effective ground is in respect of disallowance of ₹ 50,000/- out of freight and transportation expense and ₹ 50,000/- out of building repair and maintenance. 4. Brief facts of the case are that the assessee derives income from manufacture and trading of jute goods and synthetic yarn. The assessee filed return of income declaring total income of ₹ 2,43,64,263/-. The assessee appeared before the Assessing Officer and produced books of account. The books of account produced were test-checked by the Assessing Officer. The Assessing Officer noticed that in Jute Division the assessee has debited ₹ 32,55,894/- and in Synthetic Division ₹ 10,49,031/-, totalling to ₹ 43,04,925/- on account of freight and transportation. The Assessing Officer noticed that the assessee claimed the above expenditure in many cases on the basis of self-made vouchers. The expenses are not full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as the Income-tax Officer may determine. However, if the Income-tax Officer is not satisfied about the correctness or completeness of the accounts of the assessee or where no method of accounting has been regularly employed by the assessee, the Income-tax Officer may make the assessment in the manner provided in section 144. Section 145 is mandatory and the Revenue is bound by the assessee's choice of a method regularly employed unless by that method the true income, profits and gains cannot be arrived at. In other words, section 145 enacts that for the purpose of section 28 (profits and gains of business, profession or vocation) and section 56 (income from other sources), income, profit and gains must be computed in accordance with the method of accounting regularly employed by the assessee. Therefore, if the assessee regularly employs a particular method of accounting and if no defects are found in the method or maintenance of accounts, the taxing authority is bound to compute the profits and gains of business or profession or vocation in accordance with the method employed by the assessee. Therefore, in case where the Income-tax Officer or the taxing authority finds that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53,755/- 2. Repair, running (including fuel), maintenance of motor cars and the amount of depreciation thereon 12,23,810/- 20% 2,44,762/- 3. Use of telephone 9,26,726/- 20% 1,85,345/- 4. Tour and travel 12,44,804/- 5% 62,240/- 5. Total value of FBT 5,46,101/- 12. The Assessing Officer further noticed that the assessee has also debited sales incentives at ₹ 4,75,285/- on which no FBT has been shown by the assessee. The value at the rate of 20% came to ₹ 95,257/-. The A.O., after considering the assessee's submission, made addition of ₹ 95,257/- on the ground that the assessee has debited the same said sums to boost the sales, therefore, value of ₹ 95,257/- added back to the total value of FBT shown. Similarly, the Assessing Officer noted value of fringe benefit @ 20% on account of employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in including the sales incentive for the purpose of Fringe Benefit Tax is hereby confirmed as the sale incentives are in the nature of sale promotion including publicity and are also not covered by the exception specified in section 115WB(2)(D) read with the proviso thereof. Thus, the action of the Assessing Officer is confirmed. 14. We have heard the learned Representatives of the parties and records perused. The dispute is only in respect or value of fringe benefit of ₹ 95,257/- on account of sale incentive being 20% of ₹ 4,76,285/-. The contention of the assessee was that sale incentive was not paid to the employee, whereas the case of the Revenue is that sale incentive is covered by section 115WB(2)(D). The relevant section 115WB(2) of the Act is reproduced as under :- (2) The fringe benefits shall be deemed to have been provided by the employer to his employees, if the employer has, in the course of his business or profession (including any activity whether or not such activity is carried on with the object of deriving income, profits or gains) incurred any expense on, or made any payment for, the following purposes, namely :- (A) entertainment; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment to any person of repute for promoting the sale of goods or services of the business of the employer, shall not be considered as expenditure on sales promotion including publicity; (E) employees' welfare. Explanation : For the purposes of this clause, any expenditure incurred or payment made to- (i) fulfil any statutory obligation; or (ii) mitigate occupational hazards; or (iii) provide first aid facilities in the hospital or dispensary run by the employer; or (iv) provide cr che facility for the children of the employee; or (v) sponsor a sportsman, being an employee; or (vi) organise sports events for employees, shall not be considered as expenditure for employees' welfare; (F) conveyance, ** ** ** (G) use of hotel, boarding and lodging facilities; (H) repair, running (including fuel), maintenance of motor cars and the amount of depreciation thereon; (I) repair, running (including fuel) and maintenance of aircrafts and the amount of depreciation thereon; (J) use of telephone (including mobile phone) other than expenditure on leased telephone lines; (K)** ** ** (L) festival ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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