TMI Blog2014 (5) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... h a view to gain publicity and popularize the product - The assessee offered different schemes through a scratch card and purchaser/customer of a specific item manufactured by the assessee is offered various items as gift - the revenue did not invoke section 115WB(2)(o) of the Act - The AO rightly rejected the claim of the assessee which was filed by way of an application after filing of return because the AO was not empowered to entertain the claim of the assessee otherwise than by filing a revised return - the claim of deduction requires examination and verification at the end of AO – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. - I.T.A. No. 2006/Del/2011, I.T.A. No. 4652/Del/2012, I.T.A. No. 4653/Del/2012 - - - Dated:- 17-4-2014 - Shri G. D. Agrawal And Shri Chandra Mohan Garg,JJ. For the Appellant : Shri Tapas Ram Mishra For the Respondent : Shri R. S. Meena, C.I.T. DR ORDER Per Chandramohan Garg, J. M. These appeals have been preferred by the assessee against the order of Commissioner of Income Tax(A)-LTU, New Delhi dated 31.01.2011 in Appeal No. 22/09-10 for AY 2007-08; dated 2.7.2012 in Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt schemes wherein the customer is offered, on purchase of a specific item manufactured by the appellant, an appliance such as steam iron, blender, watch, bed sheet and such other similar items as a free gift. Such schemes were offered through a scratch card where the customer is given a card on random basis on purchase of an item and any gift item specified in the scratch card is handed over to the customer by the dealer. These gift items are not manufactured by the appellant, the same are purchased from the market. 4. During F.Y.2006-07, the assessee purchased gifts of Rs.1592.63 lac for the above purpose. As dealers also got benefit out of the scheme, it was decided by the assessee to recover a part of cost of gifts from the dealers. In order to reduce the expenses on such gifts, the gift items were sold to the dealers at reduced cost. By doing this, the dealers shared the cost of gift items and if any of these items remained unclaimed at the expiry of the scheme period, the dealer was free to sell these items in the open market. The sum of Rs.732.07 lacs was thus recovered from the dealers by way of such sale of gift items. This had reduced the expenditure on purchase of gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, then the same gift by way of scratch card provided to the customers of the assessee could not be regarded as a fringe benefit by any stretch of imagination. Ld. counsel of the assessee further pointed out that the Commissioner of Income Tax(A) was not justified in not appreciating this notable fact that the judgment of the Hon'ble Supreme Court in the case of Goetze India Limited vs C.I.T. (2006) 284 ITR 323 (SC) was rendered in the context of Assessment Year 1995-96, and that the decision of the Supreme Court was no longer applicable in AY 2007-08 in view of change in section 143(3) of the Act. 8. Ld. counsel of the assessee vehemently contended that since the Commissioner of Income Tax(A) enjoys coterminous powers with the Assessing Officer, then Commissioner of Income Tax(A) grossly erred on facts and in law in not accepting the appellant's contention that notwithstanding the decision in Goetze India Limited case, the CIT (A) had the powers to adjudicate upon the appellant's claim on merits which does not, in any way, impinge upon the powers of the appellate authorities including Commissioner of Income Tax(A) and ITAT. 9. Replying to the above, ld. DR s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same view has been reiterated many times in various subsequent decisions of Hon ble Supreme Court, Hon ble High Courts and Coordinate Benches of this Tribunal and respectfully following the same, we hold that the Assessing Officer is not empowered to entertain claim for deduction of the assessee, after filing of return otherwise than by filing a revised return but the powers of this Tribunal as an appellate authority u/s 254 of the Act do not impinge upon this decision. 12. Ld. counsel of the assessee submitted that the assessee company launches different schemes wherein the customer is offered, on purchase of specific item manufactured by the assessee, an appliance or article such as steam iron, blender, watch, bed sheet and other such similar items as free gift through a scratch card where the customer is given a scratch card on random basis on purchase of an item and any gift item specified in the scratch card is handed over to the customer by the dealer on behalf of the assessee. Ld. counsel placed his reliance on the recent judgment of Hon ble Jurisdictional High Court of Delhi in the case of T T Motors Ltd. vs ACIT (2012) 247 CTR (Delhi) 384 wherein their lordships cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord and as found by the Assessing Officer, we are of the view that the expenditure incurred on accessories which were supplied to customers who have purchased cars cannot be treated as sale promotion including publicity expenses under clause (D). In the present case, the said expenditure cannot be categorized as expense incurred for promotion of sales with a view to gain publicity and popularize the product. The customers in the present case have purchased the cars, they have paid money or sale consideration for purchase of cars. As a sales package, the appellant has provided and given some accessories for which no independent or additional charge has been levied. The customer, however, in actual fact has paid for the said accessories as the cost of the accessories is inbuilt in the sale consideration paid by the customer. Only when a customer pays the sale consideration, some accessories are provided and fixed in the car as per mutual agreement or on the request made by the customer. Until and unless a customer purchases a car, no accessories are provided or furnished. The customer was not given a largesse but was offered and has managed to get a better deal for the consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng employees) is for the purposes of sales promotion and, publicity and accordingly, liable to FBT. 97. Whether expenditure on gifts under trade schemes or for promotion of company's products to distributors/retailers is liable to FBT? Ans. Ordinarily, a gift is defined as anything given or presented without consideration. Therefore, expenditure on gifts under trade schemes or for promotion of company's products to distributors/retailers, falls within the scope of the provisions of clause (0) of sub -section (2) of section 115WB and, accordingly, is liable to FBT. 98. Does a gift to customer fall under 'sales promotion' or 'gift'? Ans. In terms of the rules of interpretation of a statute, a specific provision in law overrides a general provision. Therefore, a gift to a customer, even though for the purposes of sales promotion, would fall within the scope of the specific provision of clause (0) of sub-section (2) of section 115WB relating to 'gift'. 22. The contention of the appellant is that the answer to question No. 66 given in the CBDT circular is very wide and, goes beyond the scope of the enactment. A purchaser or customer pays fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was made for the accessories installed. These cannot be classified as gifts for which no consideration has been paid by the customers. 24. In view of the aforesaid reasoning and discussion the two questions of law mentioned above are answered in negative and in favour of the appellant and against the respondent-Revenue. In the facts of the present case, there will be no order as to costs. 13. In view of above decision of Hon ble Delhi High Court, the assessee of the present case offered different schemes through a scratch card and purchaser/customer of a specific item manufactured by the assessee is offered various items as gift. In the present case also, the revenue did not invoke clause O to sub-section (2) to section 115WB of the Act. The assessee s claim has been rejected by the Assessing Officer on legal issue by holding that the Assessing Officer was not empowered to entertain the claim of the assessee otherwise than by filing a revised return. During the hearing before us, the DR fairly accepted that it was not the contention of the revenue that the items were given to the customers free of cost as gifts. The gifts are given or presented without consideration but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall determine the value of fringe benefit afresh by affording due opportunity of hearing for the assessee. With these directions, entire controversy and all issues are restored to the file of Assessing Officer for fresh adjudication without being prejudiced with the observations made in the earlier assessment order as well as in the impugned order. 15. Thus, all grounds of the assessee are deemed to be allowed as indicated above for statistical purposes. Grounds raised by assessee in ITA 4652/D/12 for AY 2008-09 and 4653/D/12 for AY 2009-10 16. From bare reading of grounds raised by the assessee in these appeals, we clearly observe that the main controversy pertaining to taxable value of fringe benefit is similar to the assessee s case in ITA No. 2006/Del/2011 which has been adjudicated and allowed for statistical purposes by earlier part of this order. Since similar controversy has been decided by allowing grounds of the assessee in AY 2007-08, therefore, we order that the observations and findings in ITA No. 2006/Del/2011 shall apply mutis mutandis to ITA No. 4652 4653/D/2012 for AY 2008-09 and 2009-10 respectively. 17. In the result, all appeals of the assessee ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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