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Query related to tax treatment against business gifts to customer like car etc in hand of customer
Sir, please give me suggestion regarding business entity distribute Certain Business gifts to Its customers as a reward against achievement of sale targets.he is of the view that it is non-taxable in his hand as sale promotion expenses for achieving sale targets criteria now question is what will be the accounting and tax treatment in hand of its customers.all the items are to be distributed are in kind viz.cars,laptops,Tv etc.
Replies (4)
I think it is taxable to custoers. Lets see others view also
In my opinion if rewards are distributed to customers on the basis of any specific services then it becomes business income in their hand, if there is no service performed by customers then it should be treated as gift and as you mentioned the names of items are not taxable u/s 56(2)(vii) because these are not covered in the definition of property as defined in the said section.
Since this reward is for achieving sale target same will be chargeable u/s 28
There is also a judgement on this
S.28The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession",—
(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession ;
Sir please share any case law regarding such issue.
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