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Whether on the facts and in the circumstances and in law the Tribunal was correct in holding that fringe benefits brought to tax on account of sales promotion expenses, and conference charges does not attract provisions of s. 115WB of the Act, as the same were incurred to a third person and recovered perverse finding ?

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Sec. 115WB, 115WB(2)(c) & 115WB(2)(d) of Income-tax Act, 1961— Fringe benefits—Expenses incurred by the assessee towards sales promotion cannot be taxed in view of provision contained in s. 115WB(2)(d).

Facts: Whether Tribunal was correct in holding that fringe benefits brought to tax on account of sales promotion expenses, and conference charges does not attract provisions of s. 115WB as the same were incurred to a third person and recovered perverse finding ? and Whether Tribunal committed an error in not appreciating the fact that certain expenses incurred by the assessee were directly attributable to the benefit of the and recorded a perverse finding ?

Held, that admittedly, the expenditure of Rs. 83,66,959 was incurred by the assessee for the purpose of holding dealers conference. Therefore, the aforesaid expenditure would not have arrived at for determining assessee’s liability towards fringe benefit tax under s. 115WB(2)(c). Similarly, the expenses incurred by the assessee towards sales promotion cannot be taxed in view of provision contained in s. 115WB(2)(d). The CIT(A) therefore, rightly allowed the assessee’s appeal in respect of dealers trading expenses and sales promotion expenses. It is pertinent to note that Tribunal itself has recorded a finding 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 does not arise. Therefore, the order passed by the CIT(A) was rightly upheld. Thus, the substantial questions of law framed by this Court are answered against the Revenue. - CIT V/s TOYOTA KIRLOSKAR MOTOR (P) LTD. - [2020] 29 ITCD Online 014 (KARN)