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TMI Blog2016 (6) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... nd liable to be quashed. 2.1 The learned Commissioner of Income tax. LTU Bangalore has erred in passing the order under section 263 without satisfying as to how the order Passed under section 143(3) is erroneous in so far it is prejudicial to the interest of the revenue. The order so passed is bad in law and liable to be quashed. 3.1 Without prejudice, the learned Commissioner of Income tax, LTU, Bangalore has erred in passing the order under section 263 dated 12.3.2013 in respect of such matters as had been considered and decided by the learned CIT(A) vide order dated 30.11.2010 for the same assessment year i.e AY 2008-09. The order so passed under section 263 being contrary to the provisions of Explanation (c) to section 263(1) is bad in law and liable to be quashed. 4.1 The learned Commissioner of Income tax, LTU Bangalore has erred in concluding that medical reimbursements, dealer training expenses, conference expenses, business promotion expenses and sales promotion expenses are liable for FBT. 4.2 The learned Commissioner of Income tax, LTU Bangalore has erred in making various impugned conclusions which are incorrect, contrary to facts, bad in law and liable to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not required to adjudicate by passing a speaking order on all issues on which he is satisfied with the explanation of the assessee. Therefore, the CIT has not exercised his jurisdiction u/s. 263 properly and his order deserves to be set aside. In support of his contentions, he has placed reliance upon the judgment of the Hon'ble High Court of Karnataka in the case of Sun Micro Systems India Pvt. Ltd. in ITA No.203 of 2009; CIT v. Saravana Developers in ITA No.68/2014 c/w 67/2014. 6. Per contra, the ld. DR has emphatically contended that CIT has exercised his jurisdiction u/s. 263 of the Act with respect to the 5 points on which the AO has not applied his mind. He further placed reliance upon the order of the CIT passed u/s. 263 with the submission that the CIT has made a reference to Instruction No.8/2005 while holding that certain reimbursements are fringe benefits subject to tax. The ld. DR further contended that reimbursement of medical expenses, dealers training expenditure and conference expenses were not at all examined or discussed by the AO, either in his order or during the course of assessment proceedings. He simply made an observation with respect to business promotion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough his letter dated 19.4.2010. We have also carefully examined the assessment order and find that in the assessment order also, the AO has made great deliberations on sales promotion expenses, conveyance, tour & travel and gift, but no deliberation has been made with respect to the reimbursement of medical expenses, dealer training expenditure and the conference expenses. 8. During the course of hearing of the appeal also, a specific query was raised, whether any query was raised with respect to the medical reimbursement expenses, dealer training expenditure and conference expenses, but no satisfactory reply was offered on behalf of the assessee. In the light of the documents placed on record, we have no hesitation to conclude that the issue with regard to reimbursement of medical expenses, dealer training expenditure and conference expenses are the fringe benefits and are required to be subjected to tax. On this issue, the CIT has observed in his order that the Instruction No.8/2005 clarifies the confusion and answered the questions raised by the public with respect to certain items of reimbursement of the expenditures. With regard to medical reimbursement, it was clarified b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear by the Tribunal through its order in the case of ICICI Prudential Life Insurance Co. Ltd. v. ACIT (supra) by holding that the language of section 115WB is clear, unambiguous and straight and there is no place for insertion or subtraction or substitution of any word into it. A careful reading of the entire section reveals without any doubt that sub-section (2) is an independent section and is not controlled by sub-section (1) and both sub-section (1) and sub-section (2) operate in a different field. Any inference that sub-section (2) is controlled by subsection (1) and any expenditure which is not a consideration for employment as mentioned under different heads of sub-section (2), cannot be considered as fringe benefit, will lead most of the provisions of subsection (2) as redundant , otiose or meaningless. It was further held that a simple and plain reading of section 115WB(2) reveals that if the employer incurs any of the expenditure as mentioned in clause (A) to (Q), though may or may not have been incurred by the employer, but also for benefit of any third person, but in the course of business or profession, is deemed to have been provided by the employer to the employees. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and finding by the assessing authority should be supported by reasons, however, brief it may be, as in a situation where it is only a question of computation in accordance with relevant articles of a Double Taxation Avoidance Agreements, it should be clearly indicated in the order of the assessing authority, whether or not the assessee had given particulars or details of it. It is the duty of the assessing authority to do that and if the assessing authority had failed in that, more so in extending a tax relief to the assessee, the order definitely constitutes an order not merely erroneous but also prejudicial to the interest of the revenue and, therefore the Commissioner was justified in exercising the jurisdiction under section 263 of the Act. 13. In light of the judgment of the Hon'ble jurisdictional High Court, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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