ADDL CIT LARGE TAX PAYER UNIT, MUMBAI V. TATA CONSULTANCY SERVICES LTD, MUMBAI

ITA 1342/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8302 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 20-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 18-02-2013
• Court: TRIBUNAL
• Department Lawyers: IN CIRCUMSTANCES OF CA SE
• Assessee Lawyers: EFILING ON

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.1342/MUM/2013 ASSESSMENT YEAR: - 2009-10 ASST. COMMISSIONER OF INCOME TAX, -LTU CENTER-I, 28 TH FLOOR, WORLD TRADE CENTRE, CUFFE PARADE MUMBAI 400005. VS.` M/S TATA CONSULTANCY SERVICES 9 TH FLOOR, NIRMAL BUILDING, NARIMAN POINT, MUMBAI 400021. PAN:- AAACR4849R PAN:- AAACR2763E APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 5.11.2012 OF CIT(A) ARISING FROM THE ASSESSMENT ORD ER PASSED U/S 115WE(3) OF THE INCOME TAX ACT FOR THE A.Y. 2009-10. THE REV ENUE HAS RAISED FOLLOWING GROUND IN THIS APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE EXPENDITURE INCURRED T OWARDS CONTRIBUTION TO TATA BRAND OF RS. 6,38,06,565/- ADDED ON ACCOUNT OF FRINGE BENEFIT TAX WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED ITS RETURN OF FRINGE BENEFITS BY E-FILING ON 25.09.2008 AND DECLARED TOT AL VALUE OF FRINGE BENEFITS AT RS. 59,26,77,469/-. THE CASE WAS TAKEN UP FOR SCRUT INY BY THE ASSESSING REVENUE BY SHRI NEIL PHILLIP ASSESSEE BY SHRI FIROZE B. ANDHYARUJINA DATE OF HEARING 20.11.2014 DATE OF PRONOUNCEMENT 10.12.2014 ITA NO.1342/MUM/2013 ASSESSMENT YEAR: - 2009-10 2 | P A G E OFFICER. THE ASSESSEE WAS ASKED TO PRODUCE THE FRIN GE BENEFIT DETAILS. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE PAID THE TOTAL CONTRIBUTION TOWARDS TATA BRAND EQUITY OF RS. 62,37,20,092/-. OUT OF THE ABOVE AMOUNT AN AMOUNT OF RS. 30,46,87,265/- BEING ATTRIBUTABLE TO THE OPE RATIONS CARRIED OUT IN THE OVERSEAS COUNTRIES WILL NOT BE CHARGEABLE TO FBT A S PER CIRCULAR NO. 8/2005 OF CBDT AND THE BALANCE AMOUNT OF RS. 31,90,32,827/- W ILL BE FRINGE BENEFIT. THE VALUE OF FRINGE BENEFIT AT 20% WORKS OUT TO RS. 6,3 8,06,565/-. ACCORDINGLY, THE ASSESSING OFFICER CHARGED THE FBT IN RESPECT OF TH E SAID AMOUNT OF RS. 6,35,06,565/-. A SIMILAR ADDITION HAD ALSO BEEN MAD E BY THE ASSESSING OFFICER FOR THE A.Y. 2007-08 FOR THE PURPOSE OF FBT. 3. THE ASSESSEE CHALLENGED THE ORDER OF ASSESSING O FFICER BEFORE CIT(A). THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSI NG OFFICER. 4. WE HAVE HEARD THE LD. DR AS WELL AS LD. AR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT THE TRIBUNAL HAS CONSIDERED AND DECIDED THIS ISSUE IN ASSESSEES OWN CASE VIDE ORDE R DATED 26.09.2012 FOR A.Y. 2007-08. THE CIT(A) HAS DELETED THE ADDITION MADE B Y ASSESSING OFFICER BY FOLLOWING THE DECISION OF THIS TRIBUNAL IN PARA 5.1 .3 AND 5.1.4 AS UNDER:- 5.1.3 SUBSEQUENT TO THE STAND TAKEN BY MY PREDECES SOR FOR THE A.Y. 2008-09 UPHOLDING THE DECISION OF THE ASSESSING OFF ICER THE HONBLE TRIBUNAL OF MUMBAI E BENCH HAS RENDERED ITS DECIS ION FOR THE A.Y. 2007-08 WHICH IS AS UNDER:- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE ORDERS OF LOWER AUTHORITIES. IT IS NOT DISPUTED THAT PAYMENT OF M/S. TATA SONS LTD. BY THE ASSESSEE IS A SUBSCRI PTION AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND M/S. TATA SON S DT. 19.4.2004. AS PER THE TATA BRAND EQUITY AND BUSINES S PROMOTION AGREEMENT BETWEEN TATA SONS LTD., AND THE ITA NO.1342/MUM/2013 ASSESSMENT YEAR: - 2009-10 3 | P A G E ASSESSEE, THE ASSESSEE IS UNDER CONTRACTUAL OBLIGAT IONS TO MAKE PAYMENT TOWARDS THE SUBSCRIPTION FEES. IN CONSIDERATION OF THIS SUBSCRI PTION FEES, TATA SONS LTD., IS, INTER ALIA, RESPONSIBLE FOR ORGANIZING CORPORAT E IDENTITY AND BRAND PROMOTIONAL ACTIVITIES AND CAMPAIGNS ENGA GE PROFESSIONAL CONSULTANTS, MAKE AVAILABLE A POOL OF SHARABLE RESOURCES OF THE TATA GROUP TO THE COMPANY AND PROV IDE ASSISTANCE IN ACCESSING THE NETWORK OF DOMESTIC AND INTERNATIONAL BUSINESS CONTACTS AND ALSO PERMITTED THE COMPANY TO USE THE BUSINESS NAME. 9. WHILE DECIDING REVENUES APPEAL IN ITA NO. 6747/ M/2011, THIS BENCH HAD THE OCCASION TO CONSIDER THE CIRCULA R ISSUED BY CBDT BEING CIRCULAR NO.8/2005 DT. 29.8.2005 WHEREIN THIS BENCH HAS HELD THAT EMPLOYER/EMPLOYEE RELATIONSHIP IS A PRE- REQUISITE FOR THE LEVY OF FBT. RATIONALE FOR INTROD UCTION OF FBT IS THAT IT IS DIFFICULT TO ISOLATE THE PERSONAL EL EMENT IF THE BENEFITS ARE COLLECTIVELY ENJOYED BY THE PEOPLE WHI CH MEANS THAT THE PROVISIONS OF FBT WILL BE APPLICABLE ONLY IN RESPECT OF THOSE EXPENSES WHICH CONTAIN OR ATLEAST ARE LIKELY TO CONTAIN AN ELEMENT OF PERSONAL BENEFIT TO EMPLOYEES. WE DO NOT FIND ANY SUCH THING PRESENT ON THE FACTS OF THE PRESENT CASE. THE SUBSCRIPTION AMOUNT HAS BEEN PAID AS PER CONTRACTUA L AGREEMENT BETWEEN THE ASSESSEE AND M/S. TATA SONS LT D. THE INVOICE RAISED BY M/S. TATA SONS LTD. IS FOR THE SE RVICES PROVIDED FOR IT. AS NO EMPLOYER/EMPLOYEE RELATIONSH IP EXISTS BETWEEN THE ASSESSEE AND M/S. TATA SONS LTD., WE AG REE WITH THE FINDINGS OF THE LD. CIT(A) THAT SUBSCRIPTION PA YMENT DESERVES TO BE KEPT OUTSIDE THE PURVIEW OF FBT. ACC ORDINGLY ORDER OF THE LD. CIT(A) IS UPHELD AND THE REVENUES APPEAL IS DISMISSED. 5.1.4 I HAVE CONSIDERED THE FACTS, DECISION OF MY P REDECESSOR AND THE DECISION OF HONBLE ITAT REFERRED ABOVE. RESPECTFUL LY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL ITATS DECISION FOR THE A.Y. 2007- 08, AS IT IS NOTICED THAT FATS OF THIS YEAR AND THE FACTS OF A.Y. 2007-08 ARE SIMILAR, THE ADDITION MADE BY THE ASSESSING OFF ICER IN RESPECT OF FRINGE BENEFIT IS DELETED. THEREFORE, THE GROUND RA ISED BY THE ASSESSEE IS ALLOWED. ITA NO.1342/MUM/2013 ASSESSMENT YEAR: - 2009-10 4 | P A G E 5. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ERROR O R ILLEGALITY IN THE ORDER OF CIT(A) QUA THIS ISSUE. 6. THE APPEAL OF THE REVENUE IS DELAY BY 15 DAYS. W E HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MA TERIAL ON RECORD. THE DELAY IN FILING THE APPEAL BY REVENUE IS CONDONED. 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF DECEMBER 2014. SD/- SD/- (B.R.BASKARAN) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 10-12-2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI