Toyota Kirloskar Motor Pvt. Ltd., V. CIT,

ITA 1182/BANG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0328 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 23-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR CITIIIDR
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Gift; Difference of opinion; Change of opinion
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1182/BANG/2013 ASSESSMENT YEAR : 2008-09 TOYOTA KIRLOSKAR MOTOR P. LTD., PLOT NO.1, BIDADI INDUSTRIAL AREA, RAMANGAR DISTRICT. 562 109. PAN: AAACT 5415B VS. THE COMMISSIONER OF INCOME TAX, LTU, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, CA RESPONDENT BY : SHRI SANJAY KUMAR, CIT-III(DR) DATE OF HEARING : 04.05.2016 DATE OF PRONOUNCEMENT : 17.06.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 12.03.2013 OF THE COMMISSIONER OF INCOME TAX PASSED U/S. 263 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER CALLED THE ACT] HAVING FORMED A BELIEF THAT THE ASSESSMENT ORDER PASSED U/S. 115WE(3) OF T HE ACT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ITA NO.1182/BANG/2013 PAGE 2 OF 14 2. THE GROUNDS RAISED BY THE ASSESSEE ASSAILING THE ORDER OF THE CIT INTER ALIA ARE AS UNDER:- 1.1 THE LEARNED COMMISSIONER OF INCOME TAX. LTU, BANGALORE HAS ERRED IN PASSING THE ORDER UNDER SECT ION 263 IN THE MARINER PASSED BY HIM. THE CONDITIONS PRECEDENT FOR EXERCISE OF JURISDICTION WIDER SECTION 263 NOT HAVING BEEN SATI SFIED, THE ORDER PASSED UNDER SECTION 263 IS BAD IN LAW AND LIABLE T O BE QUASHED. 2.1 THE LEARNED COMMISSIONER OF INCOME TAX. LTU BA NGALORE HAS ERRED IN PASSING THE ORDER UNDER SECTION 263 WI THOUT SATISFYING AS TO HOW THE ORDER PASSED UNDER SECTION 143(3) IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTERE ST 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 H AD BEEN CONSIDERED AND DECIDED BY THE LEARNED CIT(A) VIDE O RDER 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 BA NGALORE HAS ERRED IN CONCLUDING THAT MEDICAL REIMBURSEMENTS , DEALER TRAINING EXPENSES, CONFERENCE EXPENSES, BUSINESS PR OMOTION EXPENSES AND SALES PROMOTION EXPENSES ARE LIABLE FO R FBT. 4.2 THE LEARNED COMMISSIONER OF INCOME TAX, LTU BA NGALORE HAS ERRED IN MAKING VARIOUS IMPUGNED CONCLUSIONS WH ICH ARE INCORRECT, CONTRARY TO FACTS, BAD IN LAW AND LIABLE TO BE QUASHED. 5.1 IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE A DDUCED AT THE TIME OF HEARING, THE ORDER PASSED UNDER SECTION 263 BE QUASHED OR IN THE ALTERNATIVE, MEDICAL REIMBURSEMEN TS, DEALER EXPENSES, CONFERENCE EXPENSES, BUSINESS PROMOTION E XPENSES AND ITA NO.1182/BANG/2013 PAGE 3 OF 14 SALES PROMOTION EXPENSES BE HELD AS NOT LIABLE FOR FBT. THE APPELLANT PRAYS ACCORDINGLY. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS CONTENDED THAT THE CIT HAS ISSUED SHOW CAUSE NOTICE ON THE FOLLOWING POINTS:- 1. AN AMOUNT OF RS.8,97,920/- BEING THE MEDICAL REIMBURSEMENT EXPENSES HAVE NOT BEEN ADDED BACK TO THE RETURN OF FRINGE BENEFITS. 2. THE DEALER TRAINING EXPENDITURE OF RS.6,45,32,64 8/- HAS NOT BEEN OFFERED TO FBT. AS PER THE CBDTS CIRCULAR 8/ 2006, THIS EXPENDITURE IS NOT EXEMPT FROM FBT. 3. CONFERENCE EXPENSES SHOWN IN THE RETURN OF INCOM E IS RS.230,64,748/- WHEREAS THE EXPENSES OFFERED FOR FB T IS RS.80,30,131/-. AS PER P/L ACCOUNT THE CONFERENCE E XPENSES IS RS.3,31,21,677/-. HENCE THE BALANCE AMOUNT NEED S TO BE BROUGHT TO TAX. 4. BUSINESS PROMOTION EXPENSES OF RS.66,33,731/- HA S NOT BEEN OFFERED FOR FBT. 5. EXPENSES OF RS.1,76,97,334/- SHOWN UNDER THE HEA D SALES PROMOTION HAS NOT BEEN OFFERED TO FBT. 4. THE CIT HAVING FORMED A BELIEF THAT OMISSION TO BRING TO TAX ALL THESE ITEMS HAS RESULTED IN SHORT COMPUTATION OF THE FRIN GE BENEFIT THEREBY RENDERING THE ASSESSMENT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. THE LD. COUNSEL FOR THE ASSE SSEE HAS INVITED OUR ATTENTION TO THE QUERIES ISSUED BY THE AO AND THE R EPLIES FILED BY THE ITA NO.1182/BANG/2013 PAGE 4 OF 14 ASSESSEE IN RESPONSE THERETO, WITH THE SUBMISSION T HAT THE AO HAS RAISED THE QUERIES IN RESPECT OF ITEMS POINTED OUT BY THE CIT IN HIS SHOW CAUSE NOTICE AND THE ASSESSEE HAS FILED THE REPLY EXPLAIN ING THE DETAILS AS SOUGHT BY THE AO. HE HAS FILED THE RECONCILIATION STATEME NTS TO EXPLAIN THE DISCREPANCIES POINTED OUT BY THE AO DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. IN SUPPORT THEREOF, HE HAS INVITED OU R ATTENTION TO THE DOCUMENTS APPEARING AT PAGE NOS. 42 TO 75 OF THE CO MPILATION OF THE ASSESSEE. 5. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT ONCE THE AO HAS APPLIED HIS MIND AND EXAMINED ALL THE ISSUES PO INTED OUT BY THE CIT, NO REVISION U/S. 263 OF THE ACT IS POSSIBLE ON ACCO UNT OF CHANGE OF OPINION. IT WAS FURTHER CONTENDED THAT IT IS SETTLED POSITIO N OF LAW THAT THE AO IS NOT REQUIRED TO ADJUDICATE BY PASSING A SPEAKING ORDER ON ALL ISSUES ON WHICH HE IS SATISFIED WITH THE EXPLANATION OF THE ASSESSE E. THEREFORE, THE CIT HAS NOT EXERCISED HIS JURISDICTION U/S. 263 PROPERLY AN D HIS ORDER DESERVES TO BE SET ASIDE. IN SUPPORT OF HIS CONTENTIONS, HE HAS P LACED RELIANCE UPON THE JUDGMENT OF THE HONBLE 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 HA S 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 ITA NO.1182/BANG/2013 PAGE 5 OF 14 THE ORDER OF THE CIT PASSED U/S. 263 WITH THE SUBMI SSION THAT THE CIT HAS MADE A REFERENCE TO INSTRUCTION NO.8/2005 WHILE HOL DING THAT CERTAIN REIMBURSEMENTS ARE FRINGE BENEFITS SUBJECT TO TAX. THE LD. DR FURTHER CONTENDED THAT REIMBURSEMENT OF MEDICAL EXPENSES, D EALERS 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 R ESPECT TO BUSINESS PROMOTION EXPENSES AND SALES PROMOTION EXPENSES, TH AT TOO, WAS NOT ADJUDICATED IN ACCORDANCE WITH THE LAW. THE LD. DR FURTHER CONTENDED THAT SINCE THE AO HAS NOT APPLIED HIS MIND TO CERTAIN RE IMBURSEMENTS, WHICH ACCORDING TO INSTRUCTION NO.8/2005 ARE FRINGE BENEF ITS, THE CIT HAS RIGHTLY EXERCISED HIS JURISDICTION U/S. 263 OF THE ACT AS T HE ASSESSMENT ORDER IN WHICH CERTAIN REIMBURSEMENTS ARE FRINGE BENEFITS AS PER INSTRUCTION NO.8/2005 AND WERE NOT SUBJECTED TO TAX, RESULTING THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. HE FURTHER PLACED RELIANCE UPON THE JUDGMENTS OF THE HONBLE HIGH COU RT OF KARNATAKA IN THE CASE OF CIT V. INFOSYS TECHNOLOGIES LTD. [2012] 17 TAXMANN. COM 203 (KAR.) AND THE ORDER OF THE TRIBUNAL IN THE CASE OF ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. V. ACIT [2013] 37 TAXMANN.COM 222 (MUMBAI TRIB.) IN WHICH IT HAS BEEN HELD THAT AS PER SUB-SECTION (2) OF SECTIO N 115WB, FRINGE BENEFIT TAX IS CHARGEABLE EVEN IF EMPLOYER INCURS ANY EXPEN DITURE MENTIONED THEREIN FOR BENEFIT OF A PERSON, NOT BEING AN EMPLO YEE, IN THE COURSE OF BUSINESS OR PROFESSION. RELIANCE WAS ALSO PLACED U PON THE JUDGMENT OF ITA NO.1182/BANG/2013 PAGE 6 OF 14 THE HONBLE SUPREME COURT IN THE CASE OF R & B FALCON (A) PTY LTD. V. CIT, 301 ITR 309 (SC) . 7. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE R IVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORI TIES BELOW AND DOCUMENTS PLACED ON RECORD, WE FIND THAT THE CIT HAS REVISED THE ASSESSMENT ORDER HAVING INVOKED THE JURISDICTION U/S. 263 OF THE ACT ON CERTAIN POINTS ILLUSTRATED IN PARA NO.3 HEREINABOVE. WE HAVE CA REFULLY EXAMINED THE ASSESSMENT ORDER AS WELL AS THE QUERIES RAISED BY T HE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND REPLY OF THE A SSESSEE FILED IN RESPONSE THERETO AND WE FIND THAT THE QUERIES RAISE D BY THE AO ARE AVAILABLE AT PAGE NOS.42, 43 & 51 AND IN THESE QUER Y LETTERS, BESIDES GENERAL ENQUIRY WITH REGARD TO FRINGE BENEFITS, A Q UERY WAS RAISED WITH RESPECT TO EXPENDITURE INCURRED IN CONNECTION WITH SALES PROMOTION, CONVEYANCE, TOUR AND TRAVEL AND GIFTS ONLY. NO QUE RY WAS RAISED WITH RESPECT TO AN AMOUNT OF RS.8,97,920 FOR MEDICAL REI MBURSEMENT EXPENSES, AN AMOUNT OF RS.6,45,32,048 FOR DEALER TRAINING EXP ENSES AND THE CONFERENCE EXPENSES SHOWN AT RS.230,64,748. WITH RE SPECT TO BUSINESS PROMOTION EXPENSES AND SALES PROMOTION EXPENSES, IT CAN BE SAID THAT A SPECIFIC QUERY WAS RAISED BY THE AO THROUGH HIS LET TER DATED 19.4.2010. WE HAVE ALSO CAREFULLY EXAMINED THE ASSESSMENT ORDE R AND FIND THAT IN THE ASSESSMENT ORDER ALSO, THE AO HAS MADE GREAT DELIBE RATIONS ON SALES PROMOTION EXPENSES, CONVEYANCE, TOUR & TRAVEL AND G IFT, BUT NO DELIBERATION ITA NO.1182/BANG/2013 PAGE 7 OF 14 HAS BEEN MADE WITH RESPECT TO THE REIMBURSEMENT OF MEDICAL EXPENSES, DEALER TRAINING EXPENDITURE AND THE CONFERENCE EXPE NSES. 8. DURING THE COURSE OF HEARING OF THE APPEAL ALSO , A SPECIFIC QUERY WAS RAISED, WHETHER ANY QUERY WAS RAISED WITH RESPE CT 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 REIMBURSEMEN T 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 BY THE BOARD THROUG H INSTRUCTION NO.8/2005 DATED 29.8.2005 VIDE QUESTION NO.69 THAT IF ANY SUM IS PAID BY THE EMPLOYER FOR EXPENDITURE ACTUALLY INCURRED BY THE E MPLOYEE FOR MEDICAL TREATMENT IN AN UNAPPROVED HOSPITAL AND IT EXCEEDS RS.15,000 DURING THE YEAR, SUCH SUM IS SALARY AS DEFINED IN CLAUSE (1 ) OF SECTION 17 OF THE INCOME-TAX ACT AND LIABLE TO INCOME-TAX IN THE HAND S OF THE EMPLOYEE. THERE IS NO CHANGE IN THIS POSITION. SINCE SUCH SU M IS TAXABLE IN THE HANDS OF THE EMPLOYEE, THE SAME IS NOT LIABLE TO FBT. HO WEVER, IF ANY SUM IS PAYABLE BY EMPLOYER FOR EXPENDITURE ACTUALLY INCURR ED BY EMPLOYEE FOR MEDICAL TREATMENT IN AN UNAPPROVED HOSPITAL AND IT DOES NOT EXCEED ITA NO.1182/BANG/2013 PAGE 8 OF 14 RS.15,000 DURING THE YEAR, SUCH SUM DOES NOT FALL U NDER THE HEAD SALARY AS DEFINED IN CLAUSE (1) OF SECTION 17 OF THE INCOM E-TAX ACT AND NOT LIABLE TO INCOME-TAX IN THE HANDS OF THE EMPLOYEE. SINCE SUC H SUM IS NOT TAXABLE IN THE HANDS OF EMPLOYEE, THE SAME IS LIABLE TO FBT. 9. IN LIGHT OF THE ABOVE CLARIFICATION ISSUED BY TH E CBDT ON 29.8.2005, THE AO WAS REQUIRED TO EXAMINE THE DETAILS OF MEDIC AL REIMBURSEMENT TO EMPLOYEES, WHETHER THE EXPENDITURE IS INCURRED FOR THE MEDICAL TREATMENT IN UNAPPROVED HOSPITAL AND IT EXCEEDS RS.15,000 OR NOT . IF IT DOES NOT EXCEED RS.15,000, THE ENTIRE REIMBURSEMENT OF EXPENDITURE WOULD BE FRINGE BENEFIT IN THE HANDS OF THE EMPLOYER AND SUBJECTED TO FBT. SINCE THE AO HAS NOT APPLIED HIS MIND TO REIMBURSEMENT OF MEDICAL EXPENS ES TO THE EMPLOYEES, HIS ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTER ESTS OF REVENUE AND WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT IN EXERCISING HIS JURISDICTION U/S. 263 OF THE ACT. 10. SO FAR AS DEALER TRAINING EXPENDITURE OF RS.6,4 5,32,648 IS CONCERNED, WE FIND THAT THROUGH QUESTION NO.10 OF I NSTRUCTION NO.8/2005, THE BOARD HAS CLARIFIED THAT SECTION 115WB DEFINES FRINGE BENEFITS AND SUB-SECTION (1) REFERS TO THE SPECIFIC FRINGE BENEF ITS PROVIDED BY THE EMPLOYER TO THE EMPLOYEES, WHEREAS SUB-SECTION (2) PROVIDES THAT FRINGE BENEFITS SHALL BE DEEMED TO HAVE BEEN PROVIDED BY T HE EMPLOYER TO HIS EMPLOYEES IF THE EMPLOYER INCURS ANY EXPENSE ON OR MAKES ANY PAYMENT ITA NO.1182/BANG/2013 PAGE 9 OF 14 FOR THE PURPOSES ENUMERATED IN CLAUSES (A) TO (P); MEANING THEREBY, IF THE ASSESSEE INCURS CERTAIN EXPENDITURE ON DEALERS TRAI NING, ETC., THE EXPENDITURE INCURRED WOULD BE THE FRINGE BENEFITS I N THE HANDS OF THE ASSESSEE. IT HAS ALSO BEEN MADE CLEAR BY THE TRIBU NAL THROUGH ITS ORDER IN THE CASE OF ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. V. ACIT (S UPRA) BY HOLDING THAT THE LANGUAGE OF SECTION 115WB IS CLEAR , UNAMBIGUOUS AND STRAIGHT AND THERE IS NO PLACE FOR INSERTION OR SUB TRACTION 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 SECTIO N 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 SUB- SECTION (1) AND ANY EXPENDITURE WHICH IS NOT A CONS IDERATION FOR EMPLOYMENT AS MENTIONED UNDER DIFFERENT HEADS OF SU B-SECTION (2), CANNOT BE CONSIDERED AS FRINGE BENEFIT, WILL LEAD MOST OF THE PROVISIONS OF SUB- SECTION (2) AS REDUNDANT , OTIOSE OR MEANINGLESS. IT WAS FURTHER HELD THAT A SIMPLE AND PLAIN READING OF SECTION 115WB(2) REVEAL S THAT IF THE EMPLOYER INCURS ANY OF THE EXPENDITURE AS MENTIONED IN CLAUS E (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 . WITH THIS DEEMING PROVISION, THE SCOPE OF FRINGE BENEFIT TAX HAS BEEN EXPANDED COVERING THOSE EXPENSES WHICH HAVE BEEN MENTIONED IN SUB-SEC TION (2), EVEN THOUGH THE EMPLOYEE-EMPLOYER RELATIONSHIP MAY OR MA Y NOT BE PRESENT OR ITA NO.1182/BANG/2013 PAGE 10 OF 14 EVEN THOUGH ANY BENEFIT IS DERIVED OUT OR NOT TO TH E EMPLOYEES. IN THE CASE OF R & B FALCON (A) PTY LTD. V. CIT, 301 ITR 309 (SC) , THE HONBLE APEX COURT HAS CATEGORICALLY HELD THAT SUB-SECTIONS (1) & (2) OF SECTION 115WB MUST BE HELD TO BE OPERATING IN DIFFERENT FIELDS. 11. IN LIGHT OF THE OBSERVATIONS OF THE TRIBUNAL AN D CLARIFICATION GIVEN BY THE CBDT, THE AO SHOULD HAVE EXAMINED THE NATURE OF EXPENDITURE INCURRED ON DEALERS TRAINING, BUT HE DID NOT MAKE A NY QUERY FROM THE ASSESSEE IN THIS REGARD. THEREFORE, THE AO HAS NOT AT ALL APPLIED HIS MIND TO THE EXPENDITURE INCURRED ON DEALERS TRAINING AND NON-APPLICATION OF MIND TO A PARTICULAR ISSUE WHICH RESULTS INTO LOSS TO TH E REVENUE MAKES THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. 12. WHILE ADJUDICATING THE SCOPE OF SECTION 263 OF THE ACT, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. INFOSYS TECHNOLOGIES LTD. [2012] 17 TAXMANN.COM 203 (KAR.) , THEIR LORDSHIPS HAVE HELD THAT THE SUBMISSION OF THE ASSESSEE COULD NOT BE ACCEPTED TH AT THE MATERIALS HAD BEEN PLACED BEFORE THE ASSESSING AUTHORITY AND THER EFORE THERE SHOULD BE A CONCLUSION THAT THE AUTHORITY HAS APPLIED HIS MIND TO THE SAME AND THERE WAS NO QUESTION OF THE COMMISSIONER INTERFERING BY TAKING A DIFFERENT VIEW. THEIR LORDSHIPS HAVE HELD THAT ASSESSING AUTHORITY PERFORMS A QUASI-JUDICIAL FUNCTION AND THE REASONS FOR HIS CONCLUSION AND FIN DINGS SHOULD BE FORTHCOMING IN THE ASSESSMENT ORDER. THOUGH IT IS URGED BY THE ASSESSEE ITA NO.1182/BANG/2013 PAGE 11 OF 14 THAT REASONS SHOULD BE SPELT OUT ONLY IN A SITUATIO N WHERE THE ASSESSING AUTHORITY PASSES AN ORDER AGAINST THE ASSESSEE OR A DVERSE TO THE INTEREST OF THE ASSESSEE AND THERE IS NO NEED FOR THE ASSESSING AUTHORITY TO SPELL OUT REASONS WHEN THE ORDER IS ACCEPTING THE CLAIM OF TH E ASSESSEE, TO ACCEPT A SUBMISSION OF THIS NATURE WOULD BE TO GIVE A FREE H AND TO THE ASSESSING AUTHORITY JUST TO PASS ORDER WITHOUT REASONING AND TO SPELL OUT REASONS ONLY IN A SITUATION WHERE THE FINDING IS TO BE AGAINST T HE ASSESSEE OR ANY CLAIM PUT FORTH BY THE ASSESSEE IS DENIED. THEIR LORDSH IPS FURTHER HELD THAT THERE CANNOT BE ANY DICHOTOMY OF THIS NATURE AS EVERY CON CLUSION AND FINDING BY THE ASSESSING AUTHORITY SHOULD BE SUPPORTED BY REAS ONS, HOWEVER, BRIEF IT MAY BE, AS IN A SITUATION WHERE IT IS ONLY A QUESTI ON OF COMPUTATION IN ACCORDANCE WITH RELEVANT ARTICLES OF A DOUBLE TAXAT ION AVOIDANCE AGREEMENTS, IT SHOULD BE CLEARLY INDICATED IN THE O RDER OF THE ASSESSING AUTHORITY, WHETHER OR NOT THE ASSESSEE HAD GIVEN PA RTICULARS OR DETAILS OF IT. IT IS THE DUTY OF THE ASSESSING AUTHORITY TO DO THA T 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 JURISD ICTION UNDER SECTION 263 OF THE ACT. 13. IN LIGHT OF THE JUDGMENT OF THE HON'BLE JURISDI CTIONAL 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, T HE DEALERS TRAINING ITA NO.1182/BANG/2013 PAGE 12 OF 14 EXPENSES WOULD BE THE FRINGE BENEFITS AND SUBJECTED TO TAX IN THE HANDS OF THE ASSESSEE, THE AO IS REQUIRED TO AT LEAST EXAMIN E THE NATURE OF DEALERS TRAINING EXPENDITURE. SINCE HE DID NOT EXAMINE THI S ASPECT, WE HAVE NO HESITATION TO HOLD THAT THE ASSESSMENT ORDER IS ERR ONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE IN THIS REGARD. 14. SIMILAR IS THE POSITION WITH RESPECT TO CONFERE NCE EXPENSES. THE AO HAS NOT EXAMINED THIS ASPECT ALSO EITHER IN THE ASS ESSMENT ORDER OR BY RAISING A SPECIFIC QUERY IN THIS REGARD; WHEREAS AS PER Q.NO.55 & 56 OF THE INSTRUCTION NO.8/2005, IT HAS BEEN CLARIFIED BY THE BOARD THAT THE EXPENDITURE IN THE NATURE OF FEE FOR PARTICIPATION BY THE EMPLOYEES IN ANY CONFERENCE IS NOT LIABLE TO FBT, BUT IF THE PARTICI PATION FEE INCLUDES ANY EXPENDITURE OF THE NATURE REFERRED TO IN CLAUSES (A ), (B) AND (D) TO (P) OF SUB-SECTION (2) OF SECTION 115WB, SUCH EXPENDITURE WILL BE LIABLE TO FBT. IT WAS ALSO CLARIFIED IN RESPONSE TO A QUESTION I.E., WHETHER FBT WILL APPLY TO THE EXPENDITURE INCURRED FOR THE PURPOSES OF CONFER ENCES OF THE AGENTS OR DEALERS OR DEVELOPMENT ADVISORS, THAT IN TERMS OF T HE PROVISIONS OF CLAUSE (C) OF SUB-SECTION (2) OF SECTION 115WB, ANY EXPEND ITURE INCURRED FOR THE PURPOSES OF CONFERENCE IS LIABLE TO FBT IRRESPECTIV E OF WHETHER THE CONFERENCE IS OF AGENTS OR DEALERS OR DEVELOPMENT A DVISORS OR ANY OTHER PERSONS. THEREFORE, THE EXPENDITURE INCURRED FOR T HE PURPOSES OF AGENTS OR DEALERS OR DEVELOPMENT ADVISORS IS LIABLE TO FBT. WHEN THE BOARD HAS CLARIFIED THAT CERTAIN CONFERENCE EXPENSES ARE SUBJ ECT TO FBT, THE AO OUGHT TO HAVE EXAMINED THE NATURE OF CONFERENCE EXPENSES. BUT, HE DID NOT RAISE ITA NO.1182/BANG/2013 PAGE 13 OF 14 ANY QUERY IN THIS REGARD, WHAT TO SAY ABOUT THE DIS CUSSION IN THE ASSESSMENT ORDER. FOR SIMILAR REASONS AS DISCUSSED IN THE FOREGOING PARAGRAPHS, WE ARE OF THE VIEW THAT THE ASSESSMENT ORDER IS ALSO ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE FOR NON -CONSIDERATION OF THE ISSUE OF CONFERENCE EXPENSES BY THE AO. 15. SO FAR AS SALES PROMOTION EXPENSES AND BUSINESS PROMOTION EXPENSES ARE CONCERNED, WE FIND THAT A SPECIFIC QUE RY WAS RAISED BY THE AO IN THIS REGARD AND THE ASSESSEE HAS FILED A DETA ILED REPLY IN RESPONSE THERETO. NOT ONLY IN THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO HAS ALSO EXAMINED THIS ISSUE IN THE ASSESSMENT ORDER IN PARA NOS. 2 TO 3, AFTER MAKING A DETAILED DISCUSSION WITH RESPECT TO THE RE LEVANT PROVISION AND THE NATURE OF THIS EXPENDITURE. OUT OF A TOTAL CLAIM O F RS.2,66,50,000, A SUM OF RS.1,58,9,000 WAS CHARGED TO FBT. ON A CAREFUL PER USAL OF THE ASSESSMENT ORDER, WE FIND THAT THE AO HAS EXAMINED THIS ISSUE AND ASSESSED TO FBT AN AMOUNT OF RS.1,58,95,000 OUT OF TOTAL CLAIM OF RS.2,66,50,000. THOUGH THE CIT MAY NOT AGREE WITH THE CONCLUSIONS AND THE FINDINGS OF AO, BUT IN ANY CASE, THE AO HAS APP LIED HIS MIND TO THE ISSUE AND THE CIT CANNOT THRUST UPON HIS OPINION UP ON THE AO. THEREFORE, IN THIS REGARD, WE ARE OF THE VIEW THAT SINCE THE A O HAS APPLIED HIS MIND AND EXAMINED THE ISSUE, THE CIT HAS NO JURISDICTION TO REVISE THE ORDER U/S. 263 OF THE ACT. THEREFORE, ON THIS ISSUE, WE SET A SIDE THE ORDER OF CIT. ITA NO.1182/BANG/2013 PAGE 14 OF 14 16. ACCORDINGLY, THE APPEAL IS DISPOSED OF AND WE C ONFIRM THE ORDER OF CIT WITH RESPECT TO REIMBURSEMENT OF MEDICAL EXPENS ES, DEALERS TRAINING EXPENDITURE AND CONFERENCE EXPENSES. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF JUNE, 2016. SD/- SD/- ( INTURI RAMA RAO ) (SUNIL KUMAR YADA V ) ACCOUNTANT MEMBER JUDICIA L MEMBER BANGALORE, DATED, THE 17 TH JUNE, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.