Adani Wilmar Ltd, Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 3257/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85566 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: VARTIK R CHOKSI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD , LH LHLH LH BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA NO. 3257/AHD/2010 (ASSESSMENT YEAR: 2006-07) ADANI WILMAR LIMITED FORTUNE HOUSE, NR. NAVRANGPURA RLY. CROSSING, NAVRANGPURA, AHMEDABAD APPELLANT VS. DCIT, CIRCLE-1, AHMEDABAD RESPONDENT PAN: AABCA8056D / BY ASSESSEE : SHRI VARTIK R. CHOKSI, A.R. / BY REVENUE :SHRI M. K. SINGH, SR. D.R. /DATE OF HEARING :04.02.2015 !' /DATE OF PRONOUNCEMENT : 06.02.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD, DATED 03.09.2010 FOR A.Y. 2006-07 ON THE FOLLOWING GROUND S: ITA NO. 3257/AHD/2010 FOR A.Y. 06-07 (ADANI WILMAR LTD. VS. DCIT) PAGE 2 1. IN LAW AND IN THE FACTS AND IN CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ER RED IN CONFIRMING THE ADDITION OF RS. 67,63,012/- EVEN THOUGH THEY HAVE NOT BEEN INCURRED FOR THE EMPLOYEE S OF THE APPELLANT COMPANY. 2. IN LAW AND IN THE FACTS AND IN CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT FRINGE BENEFIT TAX IS NOT LIABLE TO BE PAID BY THE APPELLANT IN RESPECT OF THE FOLLOWING ITEMS OF EXPENDITURE AS THEY HAVE BEEN INCURRED ONLY WITH RELATION TO NON-EMPLOYEES AND ARE BEING PURELY FOR THE BUSINESS PURPOSES OF THE APPELLANT SR. NO. NATURE OF EXP. / PAYMENT AMOUNT [NON EMPLOYEE RELATED EXPENSES] 1 CAR HIRE CHARGES -GUEST 293787 2 TRAVELLING EXPENDITURE OTHERS 2217858 3 ENTERTAINMENT EXPENSES 662225 4 TRAVELLING EXPENDITURE FOREIGN [OTHERS] 1207291 5 GUEST HOUSE EXPENSES 3332897 6 RECRUITMENT EXPENSES - TRVLG REIMB. 918885 7 SALES PROMOTION - CUSTOMER OFFER 5479389 8 SALES PROMOTION - OTHERS 5459810 9 SALES PROMOTION SCHEMES MATERIALS 13035575 10 SALES PROMOTION SONACHANDI 1169331 11 ENTERTAINMENT EXPENSES OTHERS 15206 TOTAL 33792254 3. THE LEARNED CIT(A) ERRED IN LAW AND IN THE FACTS AND IN CIRCUMSTANCES OF THE CASE BY INCORRECTLY APPLYING T HE PROVISIONS OF SECTION 115WB(2) OF THE INCOME TAX AC T, ITA NO. 3257/AHD/2010 FOR A.Y. 06-07 (ADANI WILMAR LTD. VS. DCIT) PAGE 3 1961 AND THEREBY LEVYING FBT ON EXPENDITURE WHICH HAD NO DIRECT/INDIRECT CONNECTION TO THE EMPLOYE ES OF THE APPELLANT COMPANY WHICH IS PRECONDITION AS P ER THE PROVISIONS OF THE ACT AND ALSO THE LEGISLATIVE INTENT AS EXPLAINED BY THE BUDGET SPEECH IN THE EXPLANATOR Y NOTES. 4. THE LEARNED CIT(A) ERRED WHILE ACTING AS THE FIR ST APPELLATE AUTHORITY UNDER THE INCOME-TAX ACT, 1961, WAS CERTAINLY NOT BOUND BY THAT CIRCULAR AND, ACCORDINGLY, HE OUGHT TO HAVE RENDERED HIS OWN DECISION ON AIL THE ISSUES RAISED BY THE APPELLANT IN ITS APPEAL BEFORE HIM WITHOUT BEING BOUND BY THE SAID CBDT CIRCULAR. 2. ASSESSEE COMPANY FILED ITS FRINGE BENEFITS TAX ( FBT) RETURN ON 28.11.2006 DECLARING FBT OF RS.1,38,48,77 0/-. ASSESSING OFFICER IN ASSESSMENT ORDER WHEREBY FRING E BENEFIT VALUE WAS ASSESSED AT RS.67.63 LACS. ASSESSING OFF ICER FOUND THAT SALES PROMOTION AND PUBLICITY, CONVEYANCE, TOU RS AND TRAVELLING EXPENSES, TELEPHONE AND OTHER ALLOWANCES AND MOTOR CAR EXPENSES ARE SPECIFICALLY INCLUDED FOR THE PURP OSE OF FRINGE BENEFIT TAX AND SPECIFIC PERCENTAGE WAS TREATED AS VALUE OF FRINGE BENEFIT. SINCE THE VALUE WAS TO BE DEEMED A S PER PROVISIONS OF ACT, ASSESSING OFFICER ADDED THE VALU E OF FRINGE BENEFIT TAX NOT INCLUDED BY ASSESSEE. 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE. HAVING CONSIDERED THE SAME, CIT(A) CONFIRMED THE OR DER OF ASSESSING OFFICER ON ISSUE. ACCORDINGLY, ADDITION TO THE VALUE OF FRINGE BENEFIT MADE BY ASSESSING OFFICER WAS CON FIRMED. ITA NO. 3257/AHD/2010 FOR A.Y. 06-07 (ADANI WILMAR LTD. VS. DCIT) PAGE 4 4. AT THE OUTSET OF HEARING, LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THIS ISSUE IS COVER ED IN ASSESSEES OWN CASE FOR A.Y. 2007-08, WHEREIN SIMIL AR ISSUE HAS BEEN SET ASIDE TO ASSESSING OFFICER WITH CERTAI N DIRECTIONS BY OBSERVING AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US IT IS ASSESSEE'S SUBMISSION THAT THE EXPENSES WHICH HAVE NOT BEEN INCURRED ARE IN RELATION TO NON EMPLOYEES AND ARE FOR PURELY FOR TH E PURPOSES OF BUSINESS. HOWEVER, WE FIND THAT THERE I S NO FINDING OF A.O OR CIT(A) AS TO WHETHER THE EXPENSES WHICH HAVE BEEN INCURRED WERE FOR EMPLOYEES OR NON EMPLOY EES AND WHETHER THE EXPENSES WERE FOR THE PURPOSE OF BU SINESS. WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE MATTER NEEDS TO BE RESTORED TO THE FILE OF A.O SO AS TO DE CIDE THE ISSUE DE NOVO IN ACCORDANCE WITH LAW AND AFTER PROV IDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE A.O IS FURTHER DIRECTED TO RECORD A CLEAR FINDING THAT WHETHER THE EXPENSES IN QUESTION WERE INCURRED WITH RELATION TO NON EMPLOYEES AND FOR THE BUSINESS PURPOSE OF THE ASSES SEE AS CLAIMED BY THE ASSESSEE AND IN LIGHT OF THE DECISIO NS RELIED UPON BY ASSESSEE. THUS THIS GROUND OF ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING, W E FIND THAT STAND OF ASSESSEE HAS BEEN THAT EXPENSES WHICH HAS NOT BEEN INCURRED ARE IN RELATION TO NON EMPLOYEES AND ARE F OR PURELY FOR THE PURPOSE OF BUSINESS. IT IS NOT CLEAR FROM THE ORDER OF ASSESSING OFFICER AS WELL AS CIT(A) AS TO WHETHER A S THE EXPENSES IN QUESTION HAVE BEEN INCURRED FOR EMPLOYE ES OR NON EMPLOYEES AND WHETHER EXPENSES WERE INCURRED FOR TH E PURPOSE OF BUSINESS. SO, WE RESTORE THIS ISSUE TO FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE DE NOVO IN AC CORDANCE WITH FACTS AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO ITA NO. 3257/AHD/2010 FOR A.Y. 06-07 (ADANI WILMAR LTD. VS. DCIT) PAGE 5 ASSESSEE. ASSESSING OFFICER IS FURTHER DIRECTED TO RECORD CLEAR FINDING AS TO WHETHER EXPENSES IN QUESTION WERE INC URRED IN RELATION TO NON EMPLOYEES AND FOR BUSINESS PURPOSE OF ASSESSEE AS CLAIMED BY ASSESSEE. SINCE WE ARE RESTORING THI S ISSUE ON BASIC PRELIMINARY ISSUE, SO WE ARE REFRAINING TO CO MMENT ON MERIT OF ISSUE AT HAND. 5. AS A RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 06 TH DAY OF FEBRUARY, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;