TMI Blog2012 (3) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... . for sales promotion expenses. The short facts apropos are that the assessee had filed returns of fringe benefit for the impugned assessment years declaring taxable fringe benefit amount of Rs. 3,99,35,771 and Rs. 4,95,40,830 respectively. During the course of proceedings for assessing the fringe benefit tax, the Assessing Officer noted that out of sales promotion expenses showed in the respective years, a part comprised of expenses incurred on gifts like gift voucher, television, camera, laptop, travel tickets, etc. The Assessing Officer was of the opinion that such gifts were to be assessed under clause (O) of sub-section (2) of section 115WB of the Income-tax Act, 1961 (in short "the Act"), whereas, the assessee had offered such amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2005] 277 ITR (St.) 20), he held that a gift to customers would not fall under "sales promotion". As per the Assessing Officer, when there was a specific provision in the statute with regard to a particular item, then it overrode the general provision. Therefore, according to him, even if the gifts were for the purpose of sales promotion, since it fell within the scope of clause (O) of sub-section (2) of section 115WB, it could be classified only as gift. He, therefore, considered expenditure incurred for such promotional gifts under clause (O) to sub-section (2) of section 115WB of the Act and 50 per cent. thereof was considered as fringe benefit. In its appeal before the learned Commissioner of Income-tax (Appeals), for both years, arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce clause (O) of subsection (2) of section 115WB was specifically applicable to gifts, the general provision applicable to sales promotion could not be applied. Though the assessee relied on the decisions of the hon'ble jurisdictional High Court in the case of CIT v. Thangamaligai [2003] 130 Taxman (Mad) 487 and CIT v. Ananda Corporation [2000] 245 ITR 217 (Mad), the learned Commissioner of Income-tax (Appeals) was of the opinion that these decisions pertained to issues relatable to expenses claimed under section 37 of the Act and they had no relevance when applying the provisions of fringe benefit tax. He, therefore, upheld the order of the Assessing Officer considering fringe benefit at 50 per cent. of the value of the gifts. Now befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3] 130 Taxman 487 (Mad) and in the case of CIT v. Ananda Corporation [2000] 245 ITR 217 (Mad), the learned Departmental representative submitted that these were taken into consideration by the learned Commissioner of Income-tax (Appeals) and properly dealt with by him. We have perused the orders and heard the rival submissions. The assertion of the assessee is that gifts were given to customers who were taking membership of timeshare units, and that too after 45 days of realisation of the payments of the membership fees. As per the assessee, if the members opted for cancellation after becoming member, then the cost of gift was recovered from the amount refunded to them. This position has not been disputed by the lower authorities. No doub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion, would be pure gifts and not freebies given with strings attached. When there is a consideration or if the consideration fixed factored in the freebies, such freebies will get lifted out of a "gift". No doubt, in answer to question No. 98 in Circular No. 8 of 2005, the Central Board of Direct Taxes has stated that a specific provision of law overrode a general provision and gift to customers will fall within the scope of specific provision of clause (O) of sub-section (2) of section 115WB of the Act. We do not have any quarrel with the proposition that specific provision of law will override the general provision. But, nevertheless, what has been given should be a gift in its pure sense to fall within clause (O) of sub-section (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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