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TMI Blog2014 (4) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee is maintaining a Foreign Representative office at Dubai, UAE, from where it gets the following assistance : a) Obtain feedback of current fashions and trends prevailing in the market. b) Contact and meet buyers and obtain orders. c) Get samples approved from the buyers. d) Get pre-production approvals from the buyers. e) Clearance of goods. f) Deliver the documents to parties and realize payments. 3. The CIT(A), in the appeal proceedings observed, "Memorandum explain the provisions of the Finance Bill, 2005, it was stated [(2005) 273 ITR (St) 196], "The rationale of levying a fringe benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred by the Foreign Representative Office at Dubai was hence not warranted. 3.5 The submission has been considered but the same cannot be accepted. In the Circular No. 8/2005 dt.29.08.2005, it has been noted that fringe benefits deemed to have been provided includes 'sales promotion including publicity but excluding expenditure on advertisement'. As the term sales promotion has not been defined it should be given its natural meaning, which is of wide import. In the circumstances the action of the A.O. in including expenditure on foreign representative office to levy FBT is sustained". 4. Aggrieved the assessee is before the ITAT. 5. Before us, the AR submitted that the rationale of FB is to bring to tax the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses reflected in the books of accounts relating to the Indian operations. If however, no separate accounts are maintained, the amount of expenses attributable to Indian operations would be the proportionate amount of the global expenditure. Further, such proportionate amount shall bee determined by applying to the global expenditure the proportion which the number of employees based in India bears to the total worldwide employees of the company". 6. The AR also relied on the decision of the coordinate Bench at Bangalore in the case of Toyota Kirloskar Motor Pvt Ltd vs Add CIT, reported in - 2012-TIOL-313-ITAT-BANG, where the Bench were seized with the deeming fiction embodied in subsection (2), held, "Thus, the deemin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and have perused the citations and the CBDT Circular. The issue before us, is whether provision of Fringe Benefits get attracted to the benefits on employees stationed outside India. On the impugned issue, Circular No.8 of 2005, dated 29.08.2005 has given very categorical answers, which are in response to questions no. 20 & 21, which are reproduced hereunder: "20. Is FBT payable by an Indian company having employees based both in and outside India on its total (global) expenditure incurred by it for the purposes referred to in clauses (A) to (P) of sub-section (2) of section 115WB? Ans. FBT is payable on the value of fringe benefits provided or deemed to have been provided to employees based in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployees based in India. Therefore, if an Indian company carries on business outside India but does not have any employees based in India, such company would be not liable to the FBT in India". 11. In these circumstances, when the Board itself has clarified the issue and the coordinate Bench at Bangalore in the case of Toyota Kirloskar Motor Pvt Ltd (supra) have further clarified the deeming provision of section 115WB(2). Besides the above, nowhere in either order of the revenue authorities, it could be ascertained that the assessee has crossed the parameters outlined either in the provisions of section 115WB(1) or 115WB(2) or the circular. The DR also could not convince, as to which benefit to the employee stationed at Dubai would attract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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