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2016 (6) TMI 843 - ITAT BANGALORERevision u/s 263 - default FBT computation - as per CIT(A) no query was raised with respect to an amount for medical reimbursement expenses by AO - Held that:- In light of the clarification issued by the CBDT on 29.8.2005, the AO was required to examine the details of medical reimbursement to employees, whether the expenditure is incurred for the medical treatment in unapproved hospital and it exceeds ₹ 15,000 or not. If it does not exceed ₹ 15,000, the entire reimbursement of expenditure would be fringe benefit in the hands of the employer and subjected to FBT. Since the AO has not applied his mind to reimbursement of medical expenses to the employees, his order is erroneous and prejudicial to the interests of revenue and we therefore do not find any infirmity in the order of the CIT in exercising his jurisdiction u/s. 263 of the Act. Dealer training expenditure AO should have examined the nature of expenditure incurred on dealers training, but he did not make any query from the assessee in this regard. Therefore, the AO has not at all applied 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-section (2) of section 115WB, such expenditure will be liable to FBT. The expenditure incurred for the purposes of agents or dealers or development advisors is liable to FBT. When the Board has clarified that certain conference expenses are subject to FBT, the AO ought to have examined the nature of conference expenses. But, he did not raise any query in this regard, what to say about the discussion in the assessment order. For similar reasons as discussed in the foregoing paragraphs, we are of the view that the assessment order is also erroneous and prejudicial to the interests of revenue for non-consideration of the issue of conference expenses by the AO. Sales promotion expenses and business promotion expenses 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 Appeal decided partly in favour of assessee.
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