TMI Blog2019 (1) TMI 1990X X X X Extracts X X X X X X X X Extracts X X X X ..... ord by Ld.AO to establish that payments made to non-resident involved an element of income which is chargeable to tax in India. We do not find any infirmity in the order of CIT (A) and the same is upheld. Accordingly grounds raised by revenue stand dismissed. - ITA No. 205/Del/2016, ITA No. 1256/Del/2016 - - - Dated:- 3-1-2019 - SMT. BEENA A PILLAI, JUDICIAL MEMBER AND Dr. B.R.R. KUMAR, ACCOUNTANT MEMBER For the Appellant : Sh. Surender Pal, Sr.D.R. For the Respondent : Sh. Ajay Vohra, Sr.Adv. Sh. Karan Jain, C.A. ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present appeals have been filed by revenue against order dated 13/10/15 passed by Ld.CIT(A)-1, New Delhi, for AY 2010- 11 and order dated 27/01/2016 for A.Y. 2011-12, on following grounds of appeal: ITA 205/Del/16 AY 2010-11 1. On the fact and the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition made by the A.O. amounting to Rs.1,76,41,309/- on account of disallowance of expenses u/s 40(a)(ia) of Income Tax Act, 1961. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entity Name Corporate Charges (in Rs.) Professional / Legal Services (in Rs.) Total (in Rs.) APCO Hong Kong 10,826,197 - 10,826,197 APCO US 3,890,695 1,972,031 5,862,726 APCO UK 460,933 491,451 952,384 Total 17,641,307 It is submitted by the appellant that overseas group entities had provided administrative support services, financial support services, information technology services, human resources support system and marketing support services to the appellant company in India. The nature of services provided by the overseas group entities on each spare of activities are summarized hereunder: - Administrative support services : These services involve providing strategic direction, communication and vision to APCO India, assisting APCO India in development and coordination of strategic business planning activities and ensuring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtisement for enhancing the business opportunities available to APCO group entities worldwide (including APCO India). The cost incurred in providing above-mentioned services by the overseas group entities of the appellant company are allocated across all APCO group companies worldwide including the appellant on an agreed cost allocation basis on cost to cost basis and these services have been taken on the basis of corporate service agreement with the overseas group entities. The copy of the said agreement is filed at Annexure 4 page 19- 32 of the paper book. The appellant submitted that these reimbursements have been made to group entities situated at APCO Hongkong, APCO U.S. and APCO U.K. The appellant has filed tax residency certificate of APCO U.K. and APCO U.S. as Annexure 5 to the paper book page 33-34 and as per these certificates, APCO U.S. is a corporation having tax residency at United States of America for taxation purposes. Similarly, APCO U.K. has tax residency of U.K. and subject to taxation in U.K. It is also submitted by the appellant that APCO U.S., APCO U.K. to whom reimbursement of expenses have been made as mentioned above do not constitute any permanent esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.1,76,41,309/- made by the AO is deleted. In support of my decision, reliance is placed on the decision of Hon'ble Delhi High Court in the case of DLF Commercial Project Corporation Vs. CIT-XI ITA No.627/2012 and ITA No.507/2013: 19. In the instant case, it is undisputed that M/s DLF Land Ltd. had deducted TDS on the payments made by it under various heads on behalf of the assessee. Further, it is also not disputed that the assessee deducted TDS on the service charge paid by it to M/s DLF Land Ltd. on the reimbursement expenses. In such circumstances, this Court holds that the entire amount paid by the assessee to M/s DLF Land Ltd. is entitled to deduction as expenditure. 20. In arriving at the aforesaid conclusion, this Court derives support from the Gujarat High Courts decision in Commissioner of Income Tax-Ill v. Gujarat Narmada Valley Fertilizers Co. Ltd. (in Tax Appeal No. 315 of 2013, decided on 25.06.2013), where the facts were similar to those in the present case. The Court therein rejected the revenues contention that non- deduction of TDS on reimbursement expenses would lead to disallowance of such reimbursement expenditure. The Court noted that the payee the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld, yes [Para 7] [In favour of assessee] . The facts of the above cited judicial pronouncements are identical with the facts of the appellant s case, therefore, the ratio of the said judgments is squarely applicable in the case of appellant. Hence, the appellant was not required to deduct TDS on the reimbursement of expenses made to the overseas associate concerns on cost to cost basis. The disallowance made by the Assessing Officer u/s 40(a)(ia) is accordingly deleted. 4. Aggrieved by order of Ld.CIT (A), revenue is in appeal before us now. 5. At the outset, Ld.Counsel submitted that, issue stands squarely covered in assessee s own case by decision of coordinate bench of this Tribunal, dated 05/01/18 for assessment year 2012-13 in ITA no.3353/Del/2016. Placing reliance upon the said order, Ld.Counsel submitted that, amount paid by assessee to non-residents are not chargeable to tax in their hands, and, where provisions of section 195 of the Act are not attracted, there can be no question of applying section 40 (a) (i) of the Act, for making disallowance in hands of assessee. It was submitted that, these were group charges , and assessee made payments in respect of its s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransmission Corpn. of A.P. Ltd.(supra) held that tax at source was liable to be deducted by the payer on gross amount, if such payment included in it, an amount, which was chargeable to tax in India. It was further held that, if the payer wanted to deduct tax at source not on gross amount but on lesser amount, on the footing that only a portion of the payment made represented income chargeable to tax in India , then it was necessary for him to make an application under section 195(2) of the Act to Assessing Officer (TDS) and obtain his permission for deducting tax at source at lesser amount. In our considered opinion decision of Hon ble Supreme Court in case of Transmission Corpn. of A.P. Ltd. (supra) is not applicable, as the facts are distinguishable. 8.5. It is observed that Coordinate bench of this Tribunal in assessee s own case (supra), on this issue has held as under: 4. We have heard the ld. DR and perused the relevant material on record. There is no appearance from the side of the assessee despite notice. We are, therefore, proceeding to dispose of this appeal ex parte qua the assessee but on merits. It is an admitted position as emanating from the impugned order ..... 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