TMI Blog2011 (10) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... n sales promotion including publicity would fall within the scope of the specific provision in clause (D) and not clause (O). We therefore, hold that the expenditure on gifts could not be treated as trade scheme or for promotion of company's product as per clause O of sub-section 2 of section 115WB. Appeal was allowed for statistical purpose. - IT APPEAL NO.1813 (KOL.) OF 2010 - - - Dated:- 21-10-2011 - S.V. MEHROTRA, MAHAVIR SINGH, JJ. J.P. Khaitan for the Appellant. S.K. Roy for the Respondent. ORDER S.V. Mehrotra, Accountant Member The assessee has filed this appeal against the order of ld. Commissioner of Income Tax (Appeals)-VI, Kolkata dated 06.07.2010 for the assessment year 2006-07. The only ground in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also organized sales promotion meetings of its distributors/dealers/stockiest as also masons and at such meetings, articles were presented to the distributors/dealers/stockiest and masons. The assessee's name or logo was invariably affixed on the articles and/or containers/packing thereof. The ld. CIT(Appeals) dismissed the assessee's appeal by observing as under :- "5. I have gone through the submissions of the appellant and also the order of the AO. The presentation articles given to stockists and dealers were treated as advertising/sales promotion expenses and, therefore, the appellant has taken only 20% of such expenses as taxable Fringe Benefit. As seen from details the appellant presented CD/DVD player, Audio Music system, Televisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section.115 WB(2)(O). Ld. counsel for the assessee pleaded that the order of ld. CIT(Appeals) be quashed. 4. On the other hand, ld. D.R. for the Revenue relied on the order of ld. CIT(Appeals). 5. We have given our careful consideration to the rival submissions made before us and have perused the orders of authorities below. Section 115WB(2) of the Act specifies various expenses, which are considered to be in the nature of fringe benefits. Clause (D) of the said section treats expenditure on sales promotion including publicity as taxable Fringe Benefit and Clause (O) treats expenditure on gifts provided by the employer as taxable fringe benefit. As per section 115WC(1)(c), 20% of the expenses incurred on sales promotion including public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have normally to be given without any consideration out of one's own volition Further, it is not disputed that presentation articles carried the name or logo of the assessee and, therefore, the use was for the purposes of advertisement.. Under such circumstances, the impugned expenditure is to be treated as expenditure on sales promotion including publicity and could not be classified under clause(O) treating it as gift. 6. Now, let us examine the CBDT Circular No.8 dtd. August 2005 on this issue on which reliance has been placed by lower revenue authorities [ 277 ITR (St) (49)- Q.No.97 and 98 reads as under:- "97. Whether expenditure on gifts under trade schemes or for promotion of company's products to distributors/retailers is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scheme depending upon sales targets achieved by stockiest/ dealers. We are, therefore, of the opinion that reliance cannot be placed on CBDT Circular as it is not in conformity with the statute. The Circular, which is not in conformity with the statutory provision, is not binding and, therefore, cannot be relied upon. It is purely a question of law as to what is the interpretation of the term 'sales promotion including publicity expenses' and of 'gifts'. If some expenditure is in the nature of sales promotion then on the basis of CBDT Circular, it cannot be treated as 'gift' thereby leaving the assessee to suffer high tax burden. We are not in agreement with the answer given to question nos. 97 98 by CBDT as noted above. Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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