ACIT RG 8(3), MUMBAI V. SKOL BREWERIES LTD, MUMBAI

ITA 4402/MUM/2012

• Counselvise Citation: 440219914 RSA 2012
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 28-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 29-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Commercial expediency

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI A.D.JAIN (JM) AND RAJENDRA (AM) . . , , ./ I.T.A. NO. 4402 / MUM/20 1 2 ( / ASSESSMENT YEAR : 20 0 6 - 07 ) THE ASSTT.COMMISSIONER OF INCOME TAX - 8(3), ROOM NO.217, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S SKOL BREWERIES LTD, UNIT NO.1021, SURVEY NO.131A, SOLITAIRE CORPORATE PARK, 10, C HAKALA KURLA ROAD, ANDHERI(W), MUMBAI - 4000 93 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAICS2238R / APPELLANT BY SHRI MANJUNATHASWAMY / RSPONDENT BY SHRI R R VORA / DATE OF HEARING : 2 8 . 7 . 201 5 / DATE OF PRONOUNCEMENT : 28.7 . 201 5 / O R D E R PER A D JAIN ( J M) TH IS IS DEPARTMENT S APPEAL FOR ASSESSMENT YEAR 200 6 - 07 AGAINST THE ORDER DATED 2.4. 2012 , PASSED BY THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) , TAKING FOLLOWING GROUNDS. 1 ON THE FACTS AND IN THE. CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED HOLDING THAT THE EXPENDITURE INCURRED ON DISCOUNTS AND SCHEMES OFFERED ARE OUTSIDE THE SCOPE AND PURVIEW OF FBT PROVISION WITHOUT APPRECIATING THE FACT THE SAME ARE IN THE NATURE SALES PROMOTION EXPENDITURE AND COVERED BY FBT PROVISION. ITA NO. 4 402 / MUM/20 1 2 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) E RRED IN HOLDING THAT THE EXPENDITURE INCURRED ON DISCOUNTS AND SCHEMES OFFERED ARE OUTSIDE THE SCOPE AND PURVIEW OF FBT PROVISION RELYING ON CBDT'S CIRCULAR NO. 8/2005 WITHOUT APPRECIATING THE FACT THAT THE SAID CIRCULAR IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE COMPANY.' 2 . THE B RIEF FACTS OF THE CASE . THE ASSESSEE ELECTRONICALLY FILED ITS RETURN OF FRINGE BENEFIT AT RS.3,42,68,308/ - UNDER SECTION 115WD OF THE INCOME TAX A CT. THE ASSESSMENT OF ASSESSEE WAS ACCEPTED U/S 115WE(3) OF THE ACT. THE SAID ASSESSMENT WAS RE - OPENED AND NOTICE IN RESPECT THEREOF DATED 25.3.2011 WAS SERVED UPON THE ASSESSEE CALLING UPON THE ASSESSEE WHY THE FBT SHOULD NOT HAVE BEEN PAID ON THE EXPENDITURE INCURRED ON DISCOUNT AND SCHEMES OF RS.81,43,60,568/ - AS THE SAME FORM PART OF SALES PROMOTION EXPENSE UNDER CLAUSE (D) OF SECTION 115WE(2) OF THE ACT. IN REPLY TO THE NOTICE, THE ASSESSEE SUBMITTED THAT FBT IS NOT LEVIABLE ON THE DISCOUNT AND SCHEMES FOR THE REASONS GIVEN IN ASSESSMENT ORDER DATED 23.12.2 011. 3 . THE AO DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND RELIANCE PLACED BY ASSESSEE ON CBDT CIRCULAR. ACCORDINGLY, THE AO ADDED RS.15 , 82 , 79 , 120/ - BEING 20% OF RS.81 , 43 , 60 , 568/ - . TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 4 . THE LD.CIT(A), AFTER RELYING ON THE VARIOUS CASE LAW AND CBDT CIRCULAR NO.8/2005 OBSERVED AND HELD THAT THE CIRCULAR HAS CLARIFIED THAT DISCOUNTS/REBATES (INCLUDING COMMISSION) PROVIDED TO WHOLESAL ERS/ RETAILERS/ DISTRIBUTORS ARE IN THE NATURE OF SELLING EXPENSES, THUS, OUTSIDE THE SCOPE OF THE FBT PROVISIONS RELATED TO SALES PROMOTION AND PUBLICITY. THE LD. CIT(A) ALSO HELD ITA NO. 4 402 / MUM/20 1 2 3 THAT THE PAYMENT IS MADE BY THE APPELLANT FOR COMMERCIAL EXPEDIENCY. T HE PAYMENT OF COMMISSION IS AN INTEGRAL PA R T OF PROFIT - EARNING PROCESS BECAUSE THE BUSINESS COULD NOT HAVE PROCEEDED WITHOUT INCURRING THAT COMMISSION. HE HELD THAT THE COMMISSION HAS BEEN PAID TO AGENTS FOR RENDERING SPECIFIC SERVICES I.E. FOR SENDING SALES REPORT, STOCK STATEMENT, ENSURING PAYMENT FORM THE CUSTOMERS AND MAINTAINING TH E DEPOT IN HYGIENIC MANNER. SUCH COMMISSION CANNOT BE ANY STRET CH OF IMAGINATION BE CONSIDERED AS SALES PROMOTION. ACCORDINGLY HE UPHELD THE CONTENTION OF THE ASSESSEE ALLOWED THE RELIEF TO THE ASSESSEE . 5. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, THE LD.DR REITERATED THE CONTENTIONS AS MADE BEFORE THE CIT(A) AND RELIED ON THE ORDERS OF AO. 7. THE LD.AR SUBMITT ED THE FACTS OF THE CASE AND RELIED ON THE ORDERS OF LD.CIT(A) AND PRAYED THAT THE LD.CIT(A) ALLOWED RELIEF TO THE ASSESSEE DULY CONSIDERING THE CASE LAW, CBDT CIRCULAR AND WELL AS LEGAL POSITION AND HENCE, HE SUBMITTED THAT THE ORDER OF LD.CIT(A) BE CONF IRMED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RERECORDS AVAILABLE BEFORE US. ON PERUSAL OF THE ASSESMENT ORDER, WE FIND THAT THE AO DID NOT ACCEPT THE CBDT CIRCULAR AND MADE ADDITION, WHEREAS THE LD. CIT(A) AFTER DULY CONSIDERING THE C BDT CIRCULAR NO.8/2005 IN DETAILED AND CASE LAW RELIED UPON BY THE ASSESSEE BEFORE HIM HAS GIVEN RELIEF TO THE ASSESSEE. BEFORE US ALSO THE LD. DR COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE TO CONTRADICT THE CBDT CIRCULAR ITA NO. 4 402 / MUM/20 1 2 4 AS RELIED UPON BY THE LD. CIT(A) AND THE CASE LAW RELIED UPON BY T HE ASSESSEE BEFORE THE LD.CIT(A). THEREFORE, WE ARE NOT INCLINED TO INTERFERE IN THE WELL REASONED ORDER OF THE LD. CIT(A). ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE. 9 . IN THE RESULT, T HE APPEAL OF THE DEPAR TMENT IS DISMISSED. PRONOUNCED ACCORDINGLY ON 2 8 TH JULY , 2015. 2 8 TH JULY, 2015 SD SD ( / RAJENDRA) ( . . / A.D. JAIN ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: 2 8 TH JULY, 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 CONCERNE D 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI