Gift to Stockiest and Dealers can’t be treated as Fringe Benefit Tax: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) Kolkata on 3^rd May upheld the a decision of the Commissioner of Income Tax (Appeals) CIT(A) that held gifts to stockiest and dealers not to be treated as Fringe Benefit Expenses.

The Respondent, M/s Birla Corporation had incurred expenditure under the head ‘gift to stockiest and dealers’ which were treated by the assessee as sales promotion and publicity. The Assessing Officer made it an addition as fringe benefit expenses and demanded tax under fringe benefit tax(FBT).

The CIT(A) deleted the addition made by the Assessing Officer after approached by the assessee with an appeal. This aggrieved the Revenue Department and made them appeal against the order of the CIT(A) before the ITAT.

The Bench consisting of Judicial Member S.S. Viswanethra and Accountant Member Waseem Ahmed relied squarely on the decision by the coordinate bench of this tribunal in assessee’s own case where it was held, “The very premise that that the impugned expenditure is without consideration, in the humble opinion of the Bench, is wrong because the object/consideration is sales promotion. Gifts are normally given without any consideration out of one’s own volition but in the present case various items were given in terms of trade scheme depending upon sales targets achieved by stockiest! dealers. Therefore, is not correct as per the principle of law.” Therefore, the tribunal dismissed the ground of appeal of the Revenue finding no new reason to interfere with the order of the CIT(A).