M/s. Evergreen Publications, Jalandhar V. The Addl. Commissioner of Income-tax, Jalandhar

ITA 464/ASR/2014

• Counselvise Citation: 46420914 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 14-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARSEM LAL
• Assessee Lawyers: R D SHARMA

Judgement Text

I.T.A. NO. 464 /ASR/201 4 ASSESSMENT YEAR: 2008 - 09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR [CORAM: PRAMOD KUMAR AM AND A.D. JAIN JM] I.T.A. NO. 464 /ASR/201 4 ASSESSMENT YEAR: 2008 - 09 EVERGREEN PUBLICATION (INDIA) LIMITED, . APPELLANT 40, CHANDAN NAGAR, JALANDHAR. [P AN: AA A C E 8776 A ] VS. ADDL. COMMISSIONER OF INCOME TAX , .. ....... RESPONDENT RANGE - IV , JALANDHAR . APPEARANCES BY: R.D. SHARMA FOR THE APPELLANT TARSEM LAL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: 10.06.2015 DATE OF PRONOUNCING THE ORDER: 31.08.2015 O R D E R PER BENCH : BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CALL E D INTO QUESTION CORRECTNESS OF LD. CIT (A) S O RDER DATED 09.05.2014 , IN THE MATTER OF ASSESSMENT UNDER SECTION 115WE(3) OF THE INCOME TAX ACT , 1961 (THE ACT HEREINAFTER), FOR THE ASSESSMENT YEAR 2008 - 09 , ON THE FOLLOWING GROUND: - LEARNED CIT(A), JALANDHAR IS NOT JUSTIF IED IN LAW IN CONFIRMING CHARGEABILITY OF A SUM OF RS.1017696/ - ON ACCOUNT OF CONFERENCE EXPENSES ETC. AND CONSEQUENTLY CONFIR MING AN ADDITION OF RS.203539/ - TO THE VALUE OF FRING E BENEFIT ON IRRELEVANT AND EXTRANEOUS CONSIDERATIONS DESPITE THE FACT THAT THERE IS NO FINDING IN THE ORDER OF ASSESSMENT THAT THESE EXPENSES HAVE BEEN INCURRED ON EMPLOYEES ON THE COMPANY. 2. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSE S SING OFFICER NOTED THAT WHILE THE ASSESSEE HAS I.T.A. NO. 464 /ASR/201 4 ASSESSMENT YEAR: 2008 - 09 PAGE 2 OF 4 INCURRED CONFERENCE EXPENSES OF RS.7,37,048/ - , THE ASSESSEE HAS NOT PAID FRINGE BENEFIT T A X ON THE SAME . IT WAS IN THIS BACKGROUND AND PROCEEDING ON THE UNDERLYING ASSUMPTION THAT ENTIRE CONFERENCE EXPENSES ARE LIABLE TO BE SUBJECTED TO FBT, THE ASSESSING OFFICER ADDED 20% OF THESE EXPENSE TO FRINGE BENEFIT LIABLE TO TAX. WHILE DOING SO, HE OBSERVED A S FO LLOWS : - 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEES AR WAS ASKED TO FURNISH RECONCILIATION OF EXPENSE CONSIDERED FOR FBT VIS - A - VIS EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT. FROM THE DETAILS FILED, IT WA S NOTICED THAT FBT IS NOT PAID ON SALES PROMOTION EXPENSES OF RS.11,01,612/ - ON THE PRETEXT THAT THESE PERTAIN TO REFERENCE BOOKS. HOWEVER, PERUSAL OF ACCOUNTS AND BILLS/VOUCHERS SHOWED THAT MAJORITY OF THESE EXPENSES PERTAIN TO CONFERENCE EXPENSES, WHICH ARE TAXABLE UNDER FBT. THIS WAS DULY BROUGHT TO THE NOTICE OF THE ASSESSEES ARS VIDE ORDER SHEET ENTRY DATED 25.11.2010 AND DISCUSSED WITH ASSESSEES ARS, WHO HAD NO EXPLANATION TO OFFER. HOWEVER, SUBSEQUENTLY, ON 26.11.2010, THE ASSESSEES AR, VIDE HIS WRITTEN SUBMISSION, HAS GIVE N BIFURCATION OF SALES PROMOTION EXPENSES, WHICH INCLUDES THE FOLLOWING CONFERENCE EXPENSES : - CONFERENCE EXPENSES 7,37,048/ - TAXI CHARGES 1,56,465/ - AIR TICKETS 61,116/ - STAY CHARGES 63,067/ - TOTAL 10,17,696/ - ALONG WITH H IS WRITTEN SUBMISSION, THE ASSESSEES AR HA S ALSO ATTACHED A COPY OF CBDT CLARIFICATION S ON THE ISSUE, CLAIMING THAT T H E ABOVE AMOUNTS ARE EXEMPT FROM FBT. HOWEVER, A PERUSAL OF THESE CLARIFICATIONS SHOWS THAT AS PER THE CBDT CLARIFICATION ITSELF, THE FOL LOWING EXPENSES ARE TO BE INCLUDED IN FBT: - S.NO. (A) NAME OF EXPENSE (B) ILLUSTRATIVE LIST OF EXPENSES INCLUDED (C) 4 CONFERENCE (INCLUDING IN - HOUSE TRAINING (51), TRAINING PROGRAMMES ORGANISED BY TRADE BODIES OR INSTITUTIONS (54), CONFERENCES OF THE AG ENTS OR DEALERS OR DEVELOPMENT ADVISOR S (56) - CONVEYANCE, TOUR AND TRAVEL (INCLUDING FOREIGN TRAVEL), ON HOTEL, OR BOARDING AND LODGING IN CONNECTION WITH ANY CONFERENCE THUS , IT IS MORE THAN OBVIOUS FROM THIS CLARIFICATION ISSUED BY CBDT, THAT EXPENSES I NCURRED ON CONFERENCES, INCLUDING CONVEYANCE, TOUR & TRAVEL, HOTEL I.T.A. NO. 464 /ASR/201 4 ASSESSMENT YEAR: 2008 - 09 PAGE 3 OF 4 AND BOARDING & LODGING EXPENSES, ARE CHARGEABLE TO FBT. THE AMOUNT CHARGEABLE TO FBT UNDER THE HEAD CONFERENCE EXPENSES IS, THEREFORE, RS.10,17,696/ - . 20% OF THE SAME I.E. RS.2,03,539/ - , IS THEREFORE, BEING ADDED TO THE FBT RETURNED BY THE ASSESSEE. 3. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL AND CONTENDED THAT , AS IS THE SETTLED LEGAL POSITION, SUCH CONFERENCE EXPENSES CAN BE SUBJECTED TO FBT ONLY WHEN THESE EXPENSE ARE INCURRED ON THE EMPLOYEES BUT IN THE INSTANT CA S E, FIRST OF ALL, NO EXPENDITURE H AS BEEN INCURRED BY THE ASSESSEE COMPANY IN RELATION TO EMPLOYEES AND THERE IS NO FINDING BY THE ASSESSING OFFICER TO THAT EFFECT. YET, LEARNED CIT ( A )S CONFIRMED THE A CTION OF THE ASSESSING OFFICER BY OBSERVING A FOLLOWS : - 5.2 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER AS MADE BY HIM IN THE ASSESSMENT ORDER AS WELL AS THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE COMPANY VIDE LETTER DATED 09.05.2014 . I HAVE ALS O CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE COMPANY AND OTHER MATERIAL BROUGHT ON RECORD. ON CAREFUL CONSIDERATION OF THE RIVAL CONTENTIONS, I AM ALSO OF THE OPINION THAT THE EMPLOYEE/EMPLOYER RELATIONSHIP IS A PRE - REQUISITE F OR THE LEVY OF FBT BUT THE ASSESSEE COMPANY HAS ABSOLUTELY FAILED TO ESTABLISH THAT THERE IS NO EMPLOYEE/EMPLOYER RELATIONSHIP BETWEEN THE ASSESSEE COMPANY AND THE PERSONS WHO ATTENDED THE CONFERENCE. NO DOCUMENTARY EVIDENCE WAS PRODUCED BY THE ASSESSEE C OMPANY TO JUSTIFY THAT THE CONFERENCE EXPENSES ARE NOT RELATED TO EMPLOYEES OF THE ASSESSEE COMPANY. IN VIEW OF THESE FACTS AND IN THE CIRCUMSTANCES OF THE CA S E, I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE COMPANY HA S INCURRED CONFERENCE EXPENSES ON ITS EMPLOYEE AND THE ASSESSEE COMPANY SHOULD HAVE INCLUDED THE S E EXPENSES FOR THE PURPOSE OF ARRIVING AT TAXABLE VALUE OF FRINGE BENEFITS. THE ACTION OF THE ASSESSING OFFICER IN MAKING THE IMPUGNED ADDITION IS, THEREFORE, UPHELD. IN THE RESULT, GROUND NO .1 OF APPEAL TAKEN BY THE ASSESSEE COMPANY IS DISMISSED. 4. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICAB LE LEGAL POSITION. 6. WE FIND THAT THERE ARE SEVERAL DECISIONS BY THE CO - ORDINATE BENCH, SUCH AS IN THE CASES OF INTAS P HARMACEUTICALS LTD . V S . DCI T (ITA N O.3086, 3087 & 3088/A H D/2010; ORDER D A TED 03.03.2014 ) AND DESAI BROTHERS LTD . V S . ADDL. CIT (ITA NO.1 68 /PUNE/2009; ORD ER DATED 31.03.2012) , WHICH CATEGORICALLY HOLD THAT THE R ELATIONSHIP BETWEEN THE I.T.A. NO. 464 /ASR/201 4 ASSESSMENT YEAR: 2008 - 09 PAGE 4 OF 4 PERSON ON WHOM THE EXPENSE ARE INCURRED AND THE ASSESSEE, AS EMPLOYEE IS A SINE QUA NON FOR EXPENSE S BEING SUBJECTED TO TDS. THERE IS NO FINDING TO THAT EFFE CT NOR HAS IT BEEN THE CASE OF THE ASSESSING OFFICER THAT EXPENSES WERE INCURRED ON THE EMPLOYEE S . L EARNED CIT ( A ) HAS OBSERVED THAT THE ASSESSEE HAS FAILED TO PROVE THAT THESE EXPENSES ARE NOT INCURRED ON THE EMPLOYEES BUT, IN OBSERVING SO, HE OBVIOUSLY M ISSED OUT THE FUNDAMENTAL LEGAL POSITION THAT NONE CAN BE EXPECTED TO PROVE A NEGATIVE. I T IS NOT THE CA S E OF THE AUTHORITIES BELOW T HAT ANY DETAILS WERE REQUISITIONED FROM THE ASSESSEE AND THE ASSESSEE HA S FAILED TO COMPLY WITH SUCH A REQUISITION. THE S TAND OF THE AUTHORITIES BELOW IS THUS WHOLLY UNSUSTAINABLE IN LAW. BE THAT IT MAY, LEARNED COUNSEL FOR THE A SSESSEE HAS BEEN FAIR ENOUGH TO STATE THAT HE HAS NO OBJECTION TO THE MATTER BEING REMITTED TO THE FILE OF THE A SSESSING OFFICER FOR EXAMINATION OF THIS LIMITED ASPECT OF THE MATTER A S TO WHETHER OR NOT ANY EXPENSES WERE INCURRED ON THE EMPLOYEES SO AS TO SUBJECT SUCH EXPENSE TO FBT. IN THIS VIEW OF THE MATTER, AND WITH THE CONSENT OF THE PARTIES, THE MATTER STANDS RESTORED TO THE FILE OF THE A SSESS ING OFFICER FOR THRESH ADJUDICATION IN THE LIGHT OF THE ABOVE OBSERVATIONS. WE ORDER SO. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED TODAY 31 ST DAY OF AUGUST, 2015. SD/XX SD/XX A D JAIN PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED THE 31 ST DAY OF AUGUST, 2015 PBN/* : (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR