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Sweet query

Page no : 2

Pratik More (CA FINAL CS ICWAI AMFI IRDA CGM M.COM ALL NCFM CRTFCT CPM CPA.)   (599 Points)
Replied 25 June 2009

GUDMRNG GUYS DIS IS PRATIK KUMAR MORE OVER HERE GNG 2 GIVE UR ANSWER.

1) 1ST IT SHOULD B TREATED AS BUSINESS PROMOTION EXPDTR. BCOZ IF SWEETS R GIVEN SPECIALLY ON DIWALI, IT NEVER B INCLD IN GIFTS, BCOZ GIFTS SHULD MUST B POSSOSSED FOR SOME TIME BY SOME1.

2) D FBT RATE WULD B @ 20% IRRESPECTINE OF PREVIOUS RATE @ 50% AS PER RECENT AMENDMENTS MADE BY CBDT RULES ON 16/05/2009.

THANKING YOU.


(Guest)

Hi Pratik.. I browsed web for the amendment made by CBDT... Unable to find

Can u send me the details?

CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 25 June 2009

As the sweet distribution is in connection with the festival, than it will be covered by festival expenses.

CA Vishvesh (Chartered Accountant) (187 Points)
Replied 26 June 2009

the stated exp are business promotion exp.

Viswasbhatt (SERVICE) (85 Points)
Replied 26 June 2009

When gifts are given they are given without any consideration . Here diwali expenses are being incurred on employees on account of  services they are offering to the company therefore diwali expenses are business related expenses and such expenses can not be treated as gift. If Diwali expenses are done to cater outsiders otherthan company then only it can be covered in the net of gifts.

Kunal Parikh (Chartered Accountants) (33 Points)
Replied 26 June 2009

Such expenses are in the nature of business promotion expenses and not as GIFT. Such expenditure would be liable for FBT @ 20% under business promotion expenses


(Guest)

If the comapny wants to give  gift then it can give on other days also. They take the oppurtunity of the Diwali festival to distribute sweets and in some cases even Gold coins.... Why cant it be treated as Festival Celebs for FBT????

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8504 Points)
Replied 27 June 2009

It is neither gift nor festival celebration. It will be treated as Business promotion expenditure.

Distribution of sweet is not a gift. And even it wont be called as festival celebrations. 


(Guest)

Thks Mr Amol Gopal...what kind of expenses will be covered under Festival Celebrtions for FBT? Could you please tell me sir?

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8504 Points)
Replied 27 June 2009

The festival celebrations shall include the expenditure incurred for the inhouse expenditure.. i.e. the flowers, puja, sweets for puja, decoration, etc.

The sweets distributed to outsiders shall not be considered as festival celebrations.

This is my own opinion.. However, if there is any case law or any decision given, my opinion is subject to that. 


(Guest)

Hi Priyadarshini, as you previously stated that Company distributed sweets especially for Deepawali occasion otherwise not so it shall be treated as festival celebration for FBT purpose.Mr. Amol, you are giving very narrow meaning of festival celebration and distribution of sweets.(No offences).

bhupesh saxena (Article asstt.) (42 Points)
Replied 29 June 2009

i think it will be treated as gifts as per mine knowledge......................

CA.kaya (Chartered accountant) (3985 Points)
Replied 06 July 2009

it is Business promotion expenditure


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