ADDL CIT 2(3), MUMBAI V. TATA STEEL LTD, MUMBAI

ITA 1816/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92456 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: M; RAJ A KAPADIA ITA NO S MM

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI VIJAY PAL RAO ( JM ) AND D. KARUNAKAR RAO, (AM) , . , ./ I.T.A. NO .1728/ MUM/20 11 ( / ASSESSMENT YE A R : 2006 - 07 ) DY .COMMISSIONER OF INCOME TAX, - 2(3), ROOM NO.55 5, 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S TATA STEEL LTD, BOMBAY HOUSE, 24, HOMI MODY S TREET, FORT, M UMBAI - 400001 ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO .1816/ MUM/20 11 ( / ASSESSMENT YE A R : 2007 - 08 ) DY .COMMISSIONER OF INCOME TAX, - 2(3), ROOM NO.555, 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 4000 20 / VS. M/S TATA STEEL LTD, BOMBAY HOUSE, 24, HOMI MODY STREET, FORT, MUMBAI - 400001 ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO .2376/ MUM/20 12 ( / ASSESSMENT YE A R : 2008 - 09 ) ASSTT. COMMISSIONER OF INCOME TAX, - 2(3), ROOM NO.55 2 , 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S TATA STEEL LTD, BOMBAY HOUSE, 24, HOMI MODY STREET, FORT, MUMBAI - 400001 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAACT2803M / REVENUE BY SHRI NEIL PHILIP / ASSESSEE BY S HRI RAJ A KAPADIA ITA NO S .1728/M/11,1816/M/11 AND 2376/M/2012 2 / DATE OF HEARING : 5.5.2015 / DATE OF PRONOUNCE MENT : 5. 5. 2015 / O R D E R PER VIJAY PAL RAO ( JM ) THESE THREE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE THREE SEPARATE ORDERS OF THE LD. CIT(A) FOR THE A Y S.2006 - 07 TO 2008 - 09 RESPECTIVELY. 2. THE REVENUE HAS RAISED COMMON GROU NDS IN THESE APPEALS. FOR THE SAKE OF CONVENIENCE, GROUNDS OF APPEAL TAKEN BY THE REVENUE IN THE ASSESSMENT YEAR 2006 - 07 ARE REPRODUCED BELOW: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING RELIEF TO T HE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1 . THE LD.CIT(A) IS OPPOSED TO LAW AND F ACTS OF THE CASE; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT SALES PROMOTION EXPENSE S OF RS.6.52 CORES CANNOT BE CHARGED UNDER FBT WITHOUT APPRECIATING TH AT THE SALES PROMOTION EXPENSES IS TO BE INCLUDED IN THE VALUE OF TAXABLE FRINGE BENEFITS AS PROVIDED U/S 115WB(2) OF THE IT ACT. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED 3. WE HAVE HEARD THE LD.DR AND LD AR AND CONSIDERED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT THE ISSUE INVOLVED IN THE REVENUE S APPEALS IS NOW COVERED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S TATA CONSULTANCY SERVICES LTD IN INCOME TAX APPEAL NO.1132 OF 2013 DATED 24.3.2015. THE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT HELD IN PAR AGRAPHS 8 TO 10 ARE REPRODUCED BELOW: 8. WE NEED NOT MAKE A DETAILED REFERENCE TO THIS CIRCULAR. SUFFICE IT TO NOTE THE BUDGED SPEED OF THE MINISTER OF FINANCE WHILE PRESENTING THE BUDGET FOR THE YEAR 2005 - 06, THE EXPLANATORY NOTES AND THE CIRCULARS HAVE BEEN RIGHTLY UNDERSTOOD BY THE TRIBUNAL TO MEAN THAT THE BASIS OF TAX IS ITA NO S .1728/M/11,1816/M/11 AND 2376/M/2012 3 THE BENEFIT OR PERQUISITES WHICH EMANATE OUT OF AN EMPLOYER - EMPLOYEE RELATIONSHIP. THAT IS A PREREQUISITE AND FOR LEVY OF FRINGE BENEFIT TAX. THE TRIBUNAL , IN PARAGRAPH 8 A ND 9 HAS CONCLUDED THAT IN THE PRESENT FACTS AND CIRCUMSTANCE, NO SUCH CASE AS WOULD ENABLE CHARGING FRINGE TAX EMERGES. THE SUBSCRIPTION AMOUNT HAS BEEN PAID AS PER THE CONTRACTUAL AGREEMENT BETWEEN THE ASSESSEE AND M/S TATA SONS LIMITED . THE INVOICES R AISED BY M/.S TATA SONS LIMITED ARE FOR THE SERVICES PROVIDED AND THERE IS NO EMPLOYER - EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES. 9. WE DO NOT FIND THAT SUCH A CONCLUSION IS PERVERSE. MR. ANDHYARUJINA IS, THEREFORE, RIGHT IN RELYING ON THE MATERIALS WHICH HAVE BEEN HANDED INTO US AND WHICH FIND PLACE EQUALLY IN T H E TRIBUNALS ORDER. THOSE HAVE BEEN REFERRED TO AN D IN THE RELEVANT FACTUAL BACKDROP SO ALSO ON PERUSAL OF THE AGREEMENT IN ITS ENTIRETY, THAT THE TRIBUNAL CONCLUDED THAT THERE IS NO MERIT IN THE REVENUES APPEAL. 10 .WE ARE OF THE OPINION THAT THE TRIBUNALS ORDER BASED ON THE ABOVE MATERIAL IS NEITHER PERVERSE NOR VITIATED BY ANY ERROR OF LAW APPARENT ON THE FACE OF THE RECORD . THIS APPEAL DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF L AW. IT IS DISMISSED. NO ORDER AS TO COSTS.. WE NOTE THAT THE ISSUE AND FACTS IN THE APPEALS BEFORE US ARE COMMON AS IN THE CASE OF TATA CONSULTANCY SERVICES LTD (SUPRA) THE FRINGE BENEFITS IS ASSESSED BY THE AO IN RESPECT OF SALES PROMOTION EXPENSES A RISING FROM TATA BRANCH EQUITY AND BUSINESS PROMOTION AGREEMENT WITH THE TATA SONS FOR THE PURPOSES OF POOLING OF RESOURCES OF VARIOUS TATA COMPANIES AND MAKE A COOPERATIVE EFFORT TO PROMOTE A UNITED COMMON TATA BRANCH TO MATCH THE BRAND EQUITY OF WEL L KNOWN INTERNATIONAL BRAND NAMES. THEREFORE, EXPENSES IN QUESTION ARE ON ACCOUNT OF PAYMENT FOR USE OF BRAND AS PER THE AGREEMENT WITH TATA SONS LTD WHICH IS COMMON IN THE PRESENT CASE AS WELL AS CASE OF TATA CONSULTANCY LTD.. ACCORDINGLY , FOLLOWING T HE JUDGMENT OF THE HONB L E JURISDICTIONAL HIGH COURT IN THE C AS E OF TATA SERVICES (SUPRA), WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF LD. LD.CIT(A) AND HENCE WE DISMISS ALL THE THREE APPEALS FILED BY THE REVENUE. ITA NO S .1728/M/11,1816/M/11 AND 2376/M/2012 4 4. IN THE RESULT, ALL TH E APPEALS FILED BY THE REVENUE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5TH MAY , 201 5 . 5TH MAY , 2015 SD SD ( . / D. KARUNAKAR RAO) ( / VIJAY PAL RAO ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: 5TH MAY , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI