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2018 (7) TMI 2052 - AT - Income TaxTDS u/s 194J - subscription fees paid by the assessee without deducting tax at source - HELD THAT:- The assessee produced debit notes issued by DHS, Mumbai as supporting evidence. The assessee has to pay subscription fees through Delloite, Haskins and Sells, Mumbai (DHS, Mumbai) for this purpose to DTT. However, as DHS, Mumbai makes the payment after deducting TDS and the assessee only reimburses its share of expenses, tax was not required to be deducted again in respect of its reimbursement of share of expenses to DHS, Mumbai. It is not the case of the AO that the expenses were not genuine. It is also not the case of the AO that the expenses were not incurred wholly and exclusively for the purposes of business or profession. The assessee has claimed the expenses in accordance with its cash system of accounting and the AO has not disputed the system of accounting. The AO has concluded that the assessee had paid for the professional services rendered by DHS, Mumbai without specifying the nature and details of services rendered by DHS, Mumbai. The assessee has furnished copies of debit notes issued by DHS, Mumbai mentioning the amount debited as “being your share of DTT Operational Budget (Subscription Fee) & Tech, Subscription Fees paid to Deloitte Touch Tohmatsu, New York” which have not been questioned by the AO. The assessee has also furnished evidence to prove that the assessee is a member of the global network of DTT, enjoys certain advantages as a result of the membership and has paid its contribution of the subscription to the membership of the global network. We note that Hon’ble High Court of Bombay in the case of CIT vs. Zee Entertainment Enterprises Ltd. [2018 (3) TMI 317 - BOMBAY HIGH COURT] held that reimbursement of expenses is not taxable Addition on account of rent paid by assessee on hire computers without deducting TDS u/s 194J r.w.s. 40(a)(ia) - HELD THAT:- The details on record including the details of apportionment of rent on the basis of number of employees of the participating user entities goes to show that the essence of the transaction was obtaining on lease of laptops by DTTIPL for use by employees of various concerns forming part of the network in India and the rent was paid by DTTIPL to Rent Works India (P) Ltd. after deduction of tax at source at the applicable rate. AO has held that tax was deductible at source presuming that the assessee had obtained the laptops on rent from DTTIPL which is not correct and cannot be inferred on the basis of the facts on record. Therefore, the assessee had reimbursed its share of the rent for the laptops to DTTIPL. In view of the legal position governing such reimbursement of expenses discussed in connection with reimbursement of subscription fees in para 11 of this order, no tax is deductible at source on such payments. Moreover, we note that that a similar deduction on account of rent reimbursed to DTTIPL was claimed and allowed by the AO in scrutiny assessment for the A.Y.2008-09. Addition of indemnity insurance expenses incurred for the purpose of business - HELD THAT:- We note that like any other insurance premium, the assessee has paid it to cover itself against loss arising out of damages etc. claimed from it in consequence of wrongful act in connection with professional business. Therefore, the assessee is not insured for unlawful acts or acts opposed to public policy or law. The fact that the policy has to be renewed every year by paying renewal premium precludes any enduring benefits resulting from the policy and the payment of the premium is clearly to cover losses to the business. Thus, the expenditure on professional indemnity insurance has been incurred wholly and exclusively for the purpose of business and is an admissible deduction. Expenditure on professional indemnity insurance has been incurred wholly and exclusively for the purpose of business and is an admissible deduction. That being so, we decline to interfere with the order of Id. C.I T.(A) deleting the aforesaid addition.
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