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2015 (11) TMI 113 - AT - Income TaxDisallowance u/s 40(a)(ia) - amount paid to seconded employees on which tax is not deducted at source - Held that:- Since the issue raised in this appeal is identical to the issue decided by this Bench of the Tribunal in the assessee’s own case for the subsequent assessment year 2010-11 what has been paid to the deputed personnel is a salary and hence the assessee was not liable to deduct tax at source from the payment made by it to IHC as reimbursement of salaries in respect of various personnel deputed to the hotel of the assessee. The alternative contention of the counsel also has to be accepted in view of the clear provisions of the Explanation to s. 191. Assuming, without admitting, that the assessee was liable to deduct tax at source under s. 194J, still no demand for non-deduction of tax could have been raised against the assessee. This is because the deductor will be liable only if the recipient has not paid the tax on the amount received by him. In the instant case, it is not disputed that the deputed persons, wherever liable, have paid the tax on the salaries received by them and hence no further tax can be collected from the assessee. The order passed under ss. 201, and 201(1A) is bad in law and the CIT(A) had also erred in confirming the same. Needless to add, since the assessee was not liable to deduct tax under s. 194J, there is no question of levying any interest also under s. 201(1A) Both the Revenue Authorities has not examined the following aspects and held the issue against and in favour of the assessee; i.e., whether the tax has been duly deducted at source by the assessee’s subsidiary company on the payment made by the assessee to the seconded employees from the assessee’s subsidiary company, whether the payment made by the assessee company to the seconded employees from the assessee’s subsidiary company amounts to advance payment to the assessee’s subsidiary company which is reimbursable and does not amount to additional service charges payable by the assessee company to the assessee’s subsidiary company and also the decisions cited by the assessee hereinabove, we hereby remit back the matter to the file of the Ld. Assessing Officer to consider all these aspects discussed hereinabove and pass appropriate order as per merits and law. - Decided in favour of assessee. Disallowance invoking Section-14A of the Act and Rule 8D of the Rules - Held that:- This issue is also identical to the issue raised in the assessee’s own case for the subsequent assessment year 2010-11. Since we have directed the Ld. Assessing Officer to delete the addition made on account of Section-14A with respect to investments made in the assessee’s subsidiary company following the decision of the Chennai Bench of the Tribunal in the case EIH Associates Hotels Vs. CIT [2013 (9) TMI 604 - ITAT CHENNAI ] we hereby direct the Ld. Assessing Officer to verify whether the fact of the case is identical as to what is submitted by the Ld. A.R before us and if found to be so, delete the addition made on account of Section-14A of the Act. - Decided in favour of revenue for statistical purposes
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