M/s. Mahindira Holidays & Resorts India Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1617/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61049 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-04-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H P MAHAJANI
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI N.S.SAINI, ACCOUN TANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1617/MDS/2011 (ASSESSMENT YEAR: 2008-09) M/S. MAHINDRA HOLIDAYS & RESORTS INDIA LTD., M/S.SUBBARAYA AIYAR PADMANABHAN & RAMAMANI ADVOCATES 75A, DR.RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI-600 004. PAN:AAACM 6469L VS. THE DEPUTY COMMISSIONER OF INCOME TAX-(LTU), CHENNAI-600 101. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. H.P.MAHAJANI, C.A., RESPONDENT BY : MR. SHA JI P.JACOB, ADDL. CIT DATE OF HEARING : 23 RD APRIL, 2012 DATE OF PRONOUNCEMENT : 23 RD APRIL, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY ASSESSEE IMPUGNING ORDER DATED 20.07.2011 BY CIT(LTU) (APPEA LS). 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF HOLIDAY TIME SHARE UNITS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 25.09.200 8 DECLARING FRINGE BENEFITS AT ` 7,73,44,509/- . THE RETURN WAS PROCESSED UNDER SECTION 115WE(1). THE CASE OF THE ITA NO.1617/MDS /2011 2 ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT U NDER SECTION 115WE(3) WAS COMPLETED ON 30.11.2010 MAKING ADDITION OF ` 6,66,33,051/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(LTU) (APPEALS) IMPUGNING THE ORDER DATED 30.11.2010 PASSED BY DCIT (LTU), CHENNAI. THE CIT( LTU) (APPEALS ) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE PARTLY ALLOWED THE APPEAL. THE CIT(LTU) (APPEALS) WHILE PARTLY ALLOWING THE APPEAL CONFIRMED THE EXPENDITUR E ON CUSTOMER PROMOTION AS EXPENDITURE ON GIFTS AND ACC ORDINGLY LEVIED FRINGE TAX BENEFIT @ 50%. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE CONFIRMATION OF LEVY OF FRINGE BENEFIT TAX ON THE EXPENSES INCURRED ON GIF TS FOR CUSTOMER PROMOTION. 3. SHRI H.P.MAHAJANI, AUTHORIZED REPRESENTATIVE APP EARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE APPEAL S OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2006-07 AND 2007- 08 INVOLVING SIMILAR ISSUE HAS BEEN DECIDED BY THE CO- ORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 30 TH MARCH, 2012 IN ITA NOS.512 & 513/MDS/2011. ITA NO.1617/MDS /2011 3 4. THE LEARNED D.R., ON THE OTHER HAND, SUPPORTED T HE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT THE ISSUE INVOLVED IN THE PRE SENT APPEAL HAS BEEN DECIDED BY THE CO-ORDINATE BENCH OF THE TR IBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS I.E. 2006-07 & 2007-08. THE RELEVANT EXTRACT OF THE ORDE R IS REPRODUCED HEREIN BELOW:- 7. GIFT IS NEITHER DEFINED IN THE FRINGE BENEFIT TAX PROVISIONS NOR IN THE DEFINITION SECTION 2 OF T HE ACT. HONBLE APEX COURT THROUGH ITS DECISION IN CI T V. BAGYALAKSHMI & CO. AIR 1965 SC 1708 HAS PERMITTED TAKING THE AID OF SIMILAR ENACTMENTS WHEN A WORD IS NOT DEFINED IN THE ACT PROVIDED IT IS NOT INCONSISTENT. THE TERM GIFT IS DEFINED IN SECTIO N 2(XII) OF THE GIFT TAX ACT, 1958 AS UNDER:- GIFT MEANS TRANSFER BY ONE PERSON TO ANOTHER OF ANY EXISTING MOVABLE OR IMMOVABLE PROPERTY MADE VOLUNTA RILY AND WITHOUT CONSIDERATION IN MONEY OR MONEYS WORTH AND.. WHEN LOOKED FROM THE MEANING OF GIFT AS DEFINED ABOVE, CAN WE SAY THAT THERE WAS NO ELEMENT OF QUID-PRO-QUO IN THE SO CALLED GIFTS GIVEN BY THE ASSESSEE TO ITS CUSTOMERS HERE? THERE WAS A CONDITION INBUILT. WE WILL GIVE YOU A GIFT PROVID ED YOU PAY THE MONEY AND TAKE A TIMESHARE MEMBERSHIP, THIS SEEMS TO BE CONDITION. QUID-PRO- ITA NO.1617/MDS /2011 4 QUO IS EVIDENT SINCE IF THE CUSTOMER CANCELLED HIS MEMBERSHIP, SUMS REFUNDED WERE LESS THE VALUE OF SUCH GIFTS. FACTUAL POSITION HERE IS THAT ITEMS WH ICH WERE GIVEN THOUGH CALLED FREE OF COST, HAD A CONSIDERATION IN-BUILT IN IT. IN SUCH A SITUATION, WE ARE OF THE OPINION THAT THE FREEBIES WILL ONLY FALL WITHIN WHAT IS NORMALLY CONSIDERED AS SALES PROMOTION AND ANSWER TO QUESTION NO.61 IN SAME CIRCULAR CLEARLY GOES IN FAVOUR OF ASSESSEE. THEREFORE, WE DO NOT HAVE ANY HESITATION TO HOLD THAT SUCH AMOUNT COULD ONLY BE CLASSIFIED AS SALES PROMOTION AND COULD BE CONSIDERED AS FALLING UNDER CLAUSE (B) OF SUB-SECTION (2) TO SECTION 115WB OF THE ACT. 6. THE LEARNED DR COULD NOT SHOW ANY LAW CONTRARY T O THE STAND TAKEN BY THE TRIBUNAL IN THE EARLIER CASES OF THE ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWING THE ORD ER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL CITED ABOVE, WE S ET ASIDE THE IMPUGNED ORDER AND ALLOW THE APPEAL OF THE ASSE SSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD APRIL, 2012. SD/- SD/- ( N.S. SAINI ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 23 RD APRIL, 2012. SOMU ITA NO.1617/MDS /2011 5 COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6 ) G.F .