DCIT 2(3), MUMBAI V. TATA CHEMICALS LTD, MUMBAI

ITA 1819/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9516 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Assessee Lawyers: DINESH VYAS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 8404/MUM/2011 (ASSESSMENT YEAR: 2008-09) A C I T - 2 (3) M/S. TATA CHEMICALS LTD. ROOM NO. 556, 5TH FLOOR BOMBAY HOUSE AAYAKAR BHAVAN, M.K. ROAD VS. 24 HOMI MODY STREET MUMBAI 400020 MUMBAI 400001 PAN - AAACT 4059 M APPELLANT RESPONDENT ITA NO. 1819 & 1730/MUM/2011 (ASSESSMENT YEARS: 2007-08 & 2006-07) D C I T - 2 (3) M/S. TATA CHEMICALS LTD. ROOM NO. 555, 5TH FLOOR BOMBAY HOUSE AAYAKAR BHAVAN, M.K. ROAD VS. 24 HOMI MODY STREET MUMBAI 400020 MUMBAI 400001 PAN - AAACT 4059 M APPELLANT RESPONDENT APPELLANT BY: MS. GIRIJA DAYAL RESPONDENT BY: SHRI DINESH VYAS DATE OF HEARING: 29.11.2012 DATE OF PRONOUNCEMENT: 29.11.2012 O R D E R PER D. MANMOHAN, V.P. THESE THREE APPEALS, FILED AT THE INSTANCE OF THE R EVENUE, INVOLVE IDENTICAL ISSUE AND THEREFORE WE PROCEED TO DISPOSE OF THE SAME BY A COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. AT THE OUTSET IT MAY BE NOTICED THAT THE APPEAL PER TAINING TO A.Y. 2008-09 WAS LISTED FOR HEARING ON 26.11.2012 WHEREI N THE FOLLOWING GROUND WAS URGED BEFORE US: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT SALES PROMOTIO N EXPENSE OF RS.2.27 CR. CANNOT BE CHARGED UNDER FBT WITHOUT APP RECIATING ITA NO. 8404/MUM/2011 M/S. TATA CHEMICALS LTD. 2 THAT SALES PROMOTION EXPENSES IS TO BE INCLUDED IN THE VALUE OF TAXABLE FRINGE BENEFITS AS PROVIDED U/S. 115WB(2) O F THE I.T. ACT. 3. THE IMPUGNED ORDER OF THE CIT(A) READS AS UNDER: - 1. THE APPEAL PERTAINS TO ADDITION OF ` 2,27,06,318/- OF FRINGE BENEFIT WITH RESPECT TO SALES OF PROMOTION EXPENSES PAID TO TATA SONS LTD. THIS ISSUE IS COVERED IN FAVOUR OF THE APPELLA NT BY THE ORDERS OF MY LD. PREDECESSOR FOR A.YS. 2006-07 & 2007-08 DATE D 29.12.2010, AS PER PARA 4 TO 4.9 AND PARA 5 TO 5.2, PAGES 1 TO 11 OF THE ORDER OF A.Y. 2007-08 AND IDENTICAL ORDER PASSED FOR A.Y. 20 06-07. FOLLOWING THE SAME, THE APPEAL IS ALLOWED . 4. HAVING REGARD TO THE FACT THAT NO DETAILS WERE FOUN D IN THE IMPUGNED ORDER THE BENCH WAS OF THE OPINION THAT THIS REQUIR ES BE CLUBBED ALONGWITH THE APPEALS PERTAINING TO A.Y. 2006-07 AND A.Y. 200 7-08, FOR WHICH THE LEARNED D.R. AS WELL AS THE LEARNED COUNSEL FOR THE ASSESSEE AGREED AND ACCORDINGLY THE APPEALS PERTAINING TO THE EARLIER A SSESSMENT YEARS WERE CALLED FOR. REGISTRY ACCORDINGLY PLACED THE TWO APP EAL SETS, WHICH ARE NUMBERED AS ITA 1730/MUM/2011 (2006-07) AND ITA NO. 1819/MUM/2011 (2007-08). HERE ALSO THE GROUND URGED BEFORE THE TR IBUNAL WAS VERBATIM THE SAME EXCEPT FOR THE FACT THAT THERE IS VARIATION IN THE AMOUNTS DISALLOWED. 5. WE HAVE HEARD THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS THE CIT- DR. 6. THE CASE OF THE ASSESSEE IS THAT IDENTICAL ISSUE WA S DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT MUMBAI BENCHES IN THE F OLLOWING TWO CASES: - 1. ACIT VS. H V TRANSMISSION LTD. ITA NO. 7927/MUM/201 0 DATED 09.11.2012 2. DCIT VS. TATA ASSET MANAGEMENT LTD. ITA NO. 2735 & 2736/MUM/ 2011 DATED 25.04.2012. 7. THE CASE OF THE AO WAS THAT THE ASSESSEE PAID TO TA TA SONS LTD. TOWARDS SUBSCRIPTION FOR THE USE OF TATA NAME, MARK S AND MARKETING INDICA IN RESPECT OF THE COMPANYS PRODUCTS AND SERVICES, WHICH WAS TREATED BY THE ASSESSEE AS SALES PROMOTION EXPENDITURE BUT IT WAS NOT CONSIDERED FOR CALCULATING DEEMED FRINGE BENEFIT. HE THEREFORE TOO K THE AMOUNT PAID BY THE ASSESSEE COMPANY FOR THE PURPOSE OF COMPUTING DEEME D FRINGE BENEFIT UNDER ITA NO. 8404/MUM/2011 M/S. TATA CHEMICALS LTD. 3 SECTION 115WB OF THE ACT. THE FIRST APPELLATE AUTHO RITY OBSERVED THAT SECTION 115WA WHICH DEALS WITH CHARGE OF FRINGE BENEFITS T AX SPEAKS OF LEVYING TAX IN RESPECT OF FRINGE BENEFITS PROVIDED OR DEEMED TO HAVE BEEN PROVIDED BY AN EMPLOYER TO HIS EMPLOYEES IN OTHER WORDS THE SCHEME OF FRINGE BENEFITS TAX FOCUSES ON PAYMENTS RESULTING IN SOME BENEFITS TO THE EMPLOYEES OF THE ASSESSEE WHEREAS IN THE PRESENT CA SE THE AGREEMENT IS WITH TATA SONS LTD., WHO IS NOT AN EMPLOYEE OF THE ASSES SEE COMPANY. LOOKING AT THE INTENTION OF THE LEGISLATURE, THE LEARNED CIT(A ) OBSERVED THAT FBT SHOULD NOT BE LEVIED IN THE INSTANT CASE SINCE IT IS RESTR ICTED TO PAYMENTS WHICH BENEFIT AN EMPLOYEE DIRECTLY OR INDIRECTLY. IN THE PRESENT CASE THE IMPUGNED PAYMENT DID NOT RESULT IN ANY SUCH BENEFIT AND HENC E THE SAME CANNOT BE HELD EXIGIBLE TO FBT. FURTHER AGGRIEVED REVENUE IS IN APPEAL BEFORE US. 8. BOTH THE PARTIES AGREED THAT THE FACTS AND CIRCUMST ANCES ARE IDENTICAL IN ALL THE THREE YEARS AND THE FACT REMAINS THAT TH E ASSESSEE MADE PAYMENTS TO TATA SONS LTD., WHICH IS THE PROPRIETOR OF THE B RAND NAME AND LOGO OF TATA. THEREFORE, THE PAYMENT CANNOT BE STATED TO HA VE BEEN MADE TO ANY EMPLOYEE OF THE ASSESSEE COMPANY. UNDER IDENTICAL C IRCUMSTANCES THE ITAT MUMBAI BENCHES IN THE AFOREMENTIONED CASES HELD THA T FRINGE BENEFITS TAX IS NOT LEVIABLE UNDER SUCH CIRCUMSTANCES. BY RESPECTFU LLY FOLLOWING THE AFOREMENTIONED DECISIONS AND CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DO NOT CALL FOR ANY INTERFERENCE. THEREFORE WE UPHOLD THE ORDER PASSED BY THE LEARNED CIT(A) AND DISMISS THE APPEALS FILED BY THE REVENUE. 9. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER, 2012. SD/- SD/- (D. KARUNAKARA RAO) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 29 TH NOVEMBER, 2012 ITA NO. 8404/MUM/2011 M/S. TATA CHEMICALS LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 6, MUMBAI 4. THE CIT 2, MUMBAI CITY 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.