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DCIT- 2(3) R.No.555 Aayakar Bhavan, Mumbai Vs. Tata Motors Ltd. Bombay House,24, Homi Mody Street, Fort, Mumbai-40001
April, 02nd 2014
                                "H" Bench, Mumbai

      Before Honourable Vice President Shri. D. Manmohan, & Shri Rajendra (AM)

                              ITA No. 1817/Mum/2011
                             (Assessment Year 2007-08)
         DCIT- 2(3)                           Tata Motors Ltd.
         R.No.555 Aayakar Bhavan,             Bombay House,24,
         Mumbai                               Homi Mody Street, Fort,

         Appellant                            Respondent

                             (Assessment Year 2007-08)
         DCIT 2(3)                            Tata Power Co. Ltd.
         R.No.555 Aayakar Bhavan,             Bombay House,24,
         Mumbai                               Homi Mody Street, Fort,

         Appellant                            Respondent

               Date of Hearing:                   27/03/2014
               Date of Pronouncement:             27/03/2014

                       Department By.:           Shri K.C.P. Patnaik
                                                 & Pitamber Das
                       Assessee by:              Shri Dinesh Vyas


Per Bench:

      These two appeals, filed at the instance of the Revenue, are directed
against the order of Ld.CIT, Mumbai. Since common issue is involved in both these
                                                                    IT A N o s . 1 8 1 7 & 1 8 1 8 / M / 2 0 1 1

appeals, we proceed to dispose of these appeals by a combined order for the sake of
2.     The case of the Revenue is that Ld. CIT(A) erred in holding that the impugned expenses
which are on account of sales promotion cannot be charged under FBT, without appreciating
that sales promotion expenses is to be included in the value of taxable fringe benefits as
provided u/s115WB(2) of the IT Act 1961.
3.      In the case of M/s. Tata Motors Ltd it had made a payment of Rs.40,88,00,500/- to
M/s. Tata Sons ltd., towards brand equity and business promotion in accordance with BEBP
agreement. Assessee has not considered the same for the purpose of computing value of fringe
benefits. Similarly, in the case of Tata Power Co. Ltd. the assessee had incurred the expenditure
of Rs.13,20,94,819/- under the head Brand Equity. According to the Assessing Officer such
expenditure was incurred for the purpose of `sales promotion and publicity' and thus, the
provisions of section 115WB(2)(D) is attracted and consequently the expenditure deserves to be
taken into consideration for the purpose of computing value of fringe benefits.

4.     On the other hand, the cases of the assessees was that not only they but others paid
Subscription fees to owner of the Tata brand. This fee was used by the owner of the brand for
enhancing and protecting the brand by undertaking various activities such as legal expenses for
acting on infringement of brand, improvement in quality systems etc. As per the agreement of
M/s. Tata Sons Ltd. It had to protect the image and goodwill of the group and hence it cannot be
considered us expenditure for purpose of sales promotion and publicity. The AO was of the view
that 20% of the brand equity expenditure to be added to the value fringe benefits and assessment
was completed accordingly.
5.      Before the CIT(A), it was contended that section 115WB covered expenses on sales
promotion including publicity but including excluded certain expenses like advertisement of any
form in any print (including journals, catalogues or price lists) or electronic media or transport
system, by way of signs boards, banners, electric spectaculars, kiosks, hoardings, bill boards
board paper hold payment at agencies. . Ld. CIT(A) exhaustively considered this issue from para
5 onwards to hold that FBT cannot be applied in the instant case.
6.     Further aggrieved, Revenue in appeal before us. Learned Counsel, appearing on behalf of
the assessee placed before us copies of following orders of ITAT Mumbai Benches, in support
                                                                   IT A N o s . 1 8 1 7 & 1 8 1 8 / M / 2 0 1 1

of his contention that expenditure on account of sales promotion cannot be brought within the
ambit of fringe benefits tax, since the expenditure was not incurred for the employees of the
company i.e., not for the benefit of employees directly or indirectly.
1. ITA No.8297/M/2011 ACIT vs. M/s. Tata Motors Ltd., order dated 23.11.2012
2. ITA No.7927/M/2010 HV Transmissions Limited, vs. ACIT order dated 09.11.2012
3. ITA No.2337/M/2012 ACIT vs. Tata Power Co. Ltd. order dated 23.11.2011
4.ITA Nos.251&252/M/2012 TML Drivelines Ltd. vs. DCIT order dated 11.1.2013
5. ITA No.3457/M/2011 ACIT vs. Tata Consultancy Services Ltd. Dated 29.8.2005
6. ITA Nos.2735&2736/M/2011 ACIT vs. M/s. Tata Asset Management Ltd. order dated
7.      Learned Departmental Representatives, on the other hand strongly supported the order
passed by the Assessing Officer, though he admitted that the issue stands squarely covered by
the aforcited decisions.

8.      We have heard the rival submissions and perused on record. Consistent with the view
taken by the ITAT Mumbai Benches in the case of Tata Power Co. Ltd. and other group cases.
We hold that subscription amount paid by the assessees as per BEBP agreement with M/s. Tata
Sons Ltd. falls outside the ambit of fringe benefits since there is no benefit to the employees of
the assessees herein. We therefore, uphold the orders passed by the learned CIT(A).

9.      In the result, appeals of the revenue are dismissed, as pronounced in the
Open court.

                (RAJENDRA)                                             Sd/-
            ACCOUNTANT MEMBER                                      (D. MANMOHAN)
                                                                 VICE PRESIDENT
Mumbai; Dated : 27/3/2014
Copy of the Order forwarded to :

 1.     The Appellant
 2.     The Respondent.

 3.     The CIT(A)

 4.     CIT
 5.     DR, ITAT, Mumbai
                                                          IT A N o s . 1 8 1 7 & 1 8 1 8 / M / 2 0 1 1

 6.         Guard file.

                                              BY ORDER,
                          //True Copy//
                                                     (Dy./Asstt. Registrar)
                                                            ITAT, Mumbai
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