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2017 (4) TMI 49 - AT - Income TaxTDS u/s 195 - reimbursement of payroll costs and reimbursement of related professional and legal fees to Burt Hill Inc USA - Held that:- Assessee did not have any tax withholding obligations so far as these reimbursements are concerned. As the assessee did not have any tax withholding obligations, the very foundation of impugned disallowance under section 40(a)(i), which get triggered by the lapses in discharging such obligations, ceases to hold good in law. We, therefore, uphold the grievance of the assessee, and direct the Assessing Officer to delete the impugned disallowance. Disallowance of medical insurance premium paid for the employees placed at the disposal of the assessee under secondment agreement with Burt Hill Inc USA - Held that:- The seconded employees, in respect of which the impugned insurance premium was paid, were not only de facto employees of the assessee at the relevant point of time, the assessee had the obligation, under secondment agreement, to bear these costs. The expenses so incurred are in the nature of employee benefits, though paid under secondment agreement, in respect of persons working for the assessee. It was in the furtherance of legitimate business interests of the assessee that these payments were made, and, therefore, the deduction was indeed admissible under section 37(1) of the Act. We uphold the grievance of the assessee.
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