Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (5) TMI 44 - AT - Income TaxTDS on reimbursement of salary Invocation of section 40(a)(iii) of the Act Hedl that:- The Japanese company had deputed two of its employees one director and other General Manager to work for the Indian Company under the terms of deputation agreement which provided that they have to work under the control and supervision of the assessee- company The salary includes the salary paid by the Japanese Company also - Despite this vital information placed before the AO as well as the CIT(A), both have failed to appreciate that the assessee has already deducted tax u/s 192, on the entire salary including salary reimbursed by the assessee company thus, there was no requirement of making any disallowance u/s 40(a)(iii) on the ground that no TDS has been deducted - it has not been brought on the record as to how the reimbursement of salary made by the assessee company amounts to payment to the Japanese company on account of rendering of services, which can lead to an inference that there is an element of income for which there was an obligation to withhold tax u/s 195 - no disallowance either u/s 40(a)(i) or 40(a)(iii) is called for as the assessee has duly deducted tax on the entire salary u/s 192 - the total taxable salary as per the Act is ₹ 83,19,640/- only, which has been included in from no.16 an observation of the CIT(A) to confirm the findings and addition made by the AO is completely vitiated and cannot sustained - the disallowance made by the AO and confirmed by the CIT(A) is set aside Decided in favour of Assessee. Disallowance of foreign travelling expenses - Revenue was of the view that the assessee was not required to incur expenses on foreign traveling as the same should have been borne by the parent company Held that:- Once the assessee has shown that its employees have undertaken foreign travelling for the purpose of indenting business on which it has earned commission income and also on the business of import and export of goods, then same cannot be doubted until and unless it has been found that these expenses are either personal in nature or it was not for the business purpose at all- the Revenue cannot decide who should bear the expenses and why the assessee was required to incur such expenses - The decision to incur expenses is upon the assessee, so long as it is for the purpose of business - the assessee has filed exhaustive details of the foreign traveling expenses alongwith the evidences on which no infirmity or discrepancy has been found either by the Assessing Officer or by the learned CIT(A) - the assessee has incurred these expenses, which are fully verifiable and have shown to be for the business purpose, adverse presumption cannot be drawn that such expenses were genuine or were not required to be incurred by eh assessee thus, the view of the CIT(A) for confirming the disallowance cannot be sustained Decided in favour of Assessee. Disallowance of expenses u/s 40(a)(i) of the Act Held that:- The deduction of TDS amount of ₹ 1320, pertains to payment of Professional fees of ₹ 12809 to Bharti Corporate Services for providing recruitment services for the parent company - The amount of TDS which was deducted, has been deposited in the government account on 02/05/2008 i.e. much prior to the date of filing of return of income which was on 29/09/2008 filed u/s 139(1) - not only the estimated disallowance is unwarranted but also the same is uncalled for Decided in favour of Assessee. Deletion of disallowance u/s 40(a)(ia) of the Act Reimbursement of expenses Held that:- The CIT(A) has held that the expenses relating to sample charges, meeting expenses and hotel expenses are not covered under any of the provisions of section 192 to 194 LA - There is no requirement of withholding the tax under any provisions of the Act including section 195 thus, there is no reason to deviate from the findings recorded by the CIT(A) Decided against Revenue. Deletion of disallowance of 50% of commission and brokerage expenses Expenses paid for renewal of lease and license agreement Held that:- The payment of brokerage commission was paid for the purpose of renewal of Leave & License Agreement of the rented properties - The AO himself has admitted that such expenditure is allowable, but they are allowable for the period for two years thus, there is no reason for such allocation of the revenue expense to be allowed for the period of two years as the brokerage is paid in this year and is to be allowed in this year only, because the same is on account of renewal of Leave & License Agreement thus, the order fo the CIT(A) upheld Decided against Revenue.
|