Income Tax Appellate Tribunal - Chennai
Mahindira Holidays & Resorts India ... vs Assessee on 23 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND
SHRI VIKAS AWASTHY, JUDICIAL MEMBER
ITA No.1617/Mds/2011
(Assessment Year: 2008-09)
M/s. Mahindra Holidays & Resorts The Deputy Commissioner of Income
India Ltd., Tax-(LTU),
M/s.Subbaraya Aiyar Vs. Chennai-600 101.
Padmanabhan & Ramamani
Advocates
75A, Dr.Radhakrishnan Salai,
Mylapore, Chennai-600 004.
PAN:AAACM 6469L
(Appellant) (Respondent)
Appellant by : Mr. H.P.Mahajani, C.A.,
Respondent by : Mr. Shaji P.Jacob, Addl. CIT
Date of Hearing : 23rd April, 2012
Date of Pronouncement : 23rd April, 2012
ORDER
PER VIKAS AWASTHY, JUDICIAL MEMBER:
The present appeal has been filed by assessee impugning order dated 20.07.2011 by CIT(LTU) (Appeals).
2. The assessee is engaged in the business of sale of holiday 'time share' units. The assessee filed its return of income for the assessment year 2008-09 on 25.09.2008 declaring fringe benefits at ` 7,73,44,509/- . The return was processed under section 115WE(1). The case of the 2 ITA No.1617/Mds/2011 assessee was selected for scrutiny and assessment under section 115WE(3) was completed on 30.11.2010 making addition of ` 6,66,33,051/-. The assessee preferred an appeal before the CIT(LTU) (Appeals) impugning the order dated 30.11.2010 passed by DCIT (LTU), Chennai. The CIT(LTU) (Appeals ) after considering the submission of the assessee partly allowed the appeal. The CIT(LTU) (Appeals) while partly allowing the appeal confirmed the expenditure on customer promotion as expenditure on gifts and accordingly levied fringe tax benefit @ 50%. The present appeal has been preferred by the assessee against the confirmation of levy of fringe benefit tax on the expenses incurred on gifts for customer promotion.
3. Shri H.P.Mahajani, authorized representative appearing on behalf of the assessee submitted that the appeals of the assessee for the assessment years 2006-07 and 2007-08 involving similar issue has been decided by the co-ordinate bench of the Tribunal vide order dated 30th March, 2012 in ITA Nos.512 & 513/Mds/2011.
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4. The learned D.R., on the other hand, supported the orders of the lower authorities.
5. We have heard the rival submissions and perused the records. We find that the issue involved in the present appeal has been decided by the co-ordinate Bench of the Tribunal in the assessee's own case for the earlier assessment years i.e. 2006-07 & 2007-08. The relevant extract of the order is reproduced herein below:-
7. "Gift" is neither defined in the Fringe Benefit Tax provisions nor in the definition Section 2 of the Act. Hon'ble Apex Court through its decision in CIT v. Bagyalakshmi & Co. AIR 1965 SC 1708 has permitted taking the aid of similar enactments when a word is not defined in the Act provided it is not inconsistent. The term "gift" is defined in Section 2(xii) of the Gift Tax Act, 1958 as under:-
"Gift means transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth and.."
When looked from the meaning of "gift" as defined above, can we say that there was no element of quid-pro-quo in the so called gifts given by the assessee to its customers here? There was a condition inbuilt. "We will give you a gift provided you pay the money and take a timeshare membership", this seems to be condition. Quid-pro- 4 ITA No.1617/Mds/2011 quo is evident since if the customer cancelled his membership, sums refunded were less the value of such gifts. Factual position here is that items which were given though called free of cost, had a consideration in-built in it. In such a situation, we are of the opinion that the freebies will only fall within what is normally considered as sales promotion and answer to question No.61 in same circular clearly goes in favour of assessee. Therefore, we do not have any hesitation to hold that such amount could only be classified as sales promotion and could be considered as falling under clause (B) of sub-section (2) to Section 115WB of the Act.
6. The learned DR could not show any law contrary to the stand taken by the Tribunal in the earlier cases of the assessee. Therefore, respectfully following the order of the co-ordinate Bench of the Tribunal cited above, we set aside the impugned order and allow the appeal of the assessee.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 23rd April, 2012.
Sd/- Sd/-
( N.S. Saini ) (Vikas Awasthy)
Accountant Member Judicial Member
Chennai,
Dated the 23rd April, 2012.
somu
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Copy to: (1) Appellant (2) Respondent (3) CIT
(4) CIT(A) (5) D.R. (6) G.F.