INCOME TAX ACT, 1961

Section 115WB

Fringe benefit tax under section 115WB(2)(c) - Sales promotion expenses and conference charges - Employer-employee relationship -

Assessee was engaged in the business of manufacture and trading of automobiles, passenger cars and multi utility vehicles. AO held that expenses incurred by assessee were chargeable to fringe benefit tax, even if the expenses are not incurred for the purposes of the employees. It was further held that the employees have not derived any benefit from the expenses incurred for the purposes of sales, promotion does not in any way exempt the expenses from being treated as deemed fringe benefits. Held: Admittedly, the expenditure was incurred by the assessee for the purpose of holding dealers conference. Therefore, expenditure would not have arrived at for determining assessee's liability towards fringe benefit tax under section 115WB(2)(c). Similarly, the expenses incurred by assessee towards sales promotion could not be taxed in view of provision contained in section 115WB(2)(d). CIT(A) therefore, rightly allowed assessee's appeal in respect of dealers trading expenses and sales promotion expenses. Tribunal held that expenditure incurred by the assessee on sales promotion had no nexus on employer-employee relationship and for expenses incurred in holding dealers meet, the question of employer-employee relationship did not arise.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2009-10

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