TMI Blog2017 (4) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... person of repute for promoting the sale of goods or services of the business of the employer, then such expenditure shall not be considered as expenditure on sales promotion including publicity. The assessee has incurred sales promotion expenditure, which is directly paid to the retail traders. In the absence of employer and employee relationship between the payer and recipient, the question of applicability of fringe benefits on sales promotion expenses does not arise. We further noticed that the CBDT has issued a circular vide circular no.8 of 2005 dated 29.8.2005, to clarify the applicability of fringe benefits tax on sales promotion expenses and sales promotion includes sales discounts or rebates to wholesalers or customers and whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, heard together and disposed-off by way of this common order for the sake of convenience. 2. The brief facts of the case are that the assessee company is engaged in the business of manufacture and sale of beer and IMFL products. The assessee has filed its return of fringe benefits for the assessment years 2007-08 2008-09 on 30.10.2007 and 27.9.2008 declaring total value of fringe benefits at ₹ 4,06,132/- and ₹ 2,38,064/- respectively. The cases have been selected for scrutiny and accordingly, notice u/s 115WE of the Income Tax Act, 1961 (hereinafter called as 'the Act') was issued. In response to the notice, the authorized representative of the assessee appeared from time to time and furnished the information call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that trade discounts or rebates allowed to dealers or customers are in the nature of selling expenses and outside the scope of the provisions of clause (D) of the sub section (2) of section 115WB of the Act, accordingly, such trade schemes and discounts are not liable to fringe benefit tax. In this regard, relied upon the circular issued by CBDT vide circular no.8 of 2005 dated 29.8.2005. The CIT(A) after considering the submissions of the assessee and also relied upon the board circular no.8 of 2005 dated 29.8.2005, held that there is no doubt whatsoever that the incentive/commission paid for sales promotion cannot be subjected to fringe benefit tax and accordingly, directed the A.O. to delete additions made towards value of fringe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that any expenditure in the nature of sales promotion including publicity incurred for promoting the sale of goods or services of the business of the employer shall not be considered as expenditure on sales promotion including publicity for the purpose of determination of value of fringe benefits. In support of his arguments, relied upon the decision of Hon ble Bombay High Court, in the case of CIT (LTU) Vs. Tata Consultancy Services Ltd. (2015) 374 ITR 112 (Bombay) and ITAT, Mumbai bench decision in the case of Jet Airways (India) Ltd. Vs. DCIT (2013) 153 TTJ 624. The assessee also relied upon the CBDT circular no.8 of 2005 dated 29.8.2005. 6. We have heard both the parties, perused the materials available on record and gone throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red materials on record, we find that the basic requirement of section 115WB(1) (2) ares that there should be an employer and employee relationship to attract the provisions of section 115WB of the Act. Where there is no employer/employee relationship between the payer and recipient of expenditure referred to in section 115WB of the Act, then there is no FBT is leviable. Therefore, for the purpose of fringe benefits, any consideration for employment provided by way of any privilege, service, facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise to his employees and also any deemed consideration provided by the employer to his employees in the course of his business or profession t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005, to clarify the applicability of fringe benefits tax on sales promotion expenses and sales promotion includes sales discounts or rebates to wholesalers or customers and while answering question nos.58 and 60, clarified that brokerage and selling commission paid for selling goods is not expenditure for the purpose of sales promotion including publicity within the meaning of clause (d) of sub section (2) of section 115WB of the Act. The Board further clarifies that sales discount or rebates allowed to wholesale dealers or customers are in the nature of selling expenses and outside the scope of the provisions of clause (d) of sub section (2) of section 115WB of the Act. Therefore, we are of the view that any expenditure incurred is in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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