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2015 (9) TMI 1355 - AT - Income TaxTDS u/s 192 - Disallowance u/s 40(a)(ia) - non deducting tax on the payment made to the seconded employees from the assessee’s subsidiary company which is to be reimbursed by the assessee’s subsidiary company - Held that:- We find merit in the contention of the assessee. If tax is already deducted at source on the salary paid to the seconded employees by the assessee’s subsidiary company, then once again deduction of tax on such salary payment would amount to double deduction of tax at source. It is apparent from the facts of the case that the assessee company is obtaining some service from its subsidiary company for which the assessee company pays service charges to its subsidiary company. Ld. A.R. submitted before us that the amount paid to the seconded employees from the assessee’s subsidiary company is not the additional remuneration paid to the assessee’s subsidiary company but only a payment in the nature of advance which is to be reimbursed by the assessee’s subsidiary company. If that is so, then such payments would not attract the provisions of tax deducted at source. However, these aspects are not clearly brought out in the orders of the Revenue. Since the 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. - Decided in favour of revenue for statistical purposes. Disallowance of U/s.14A of the Act read with Rule 8D - Held that:- D.R could not controvert to the findings of the Ld. CIT (A) that this issue is not covered in favour of the assessee by the order of the Chennai Benches of the Tribunal in the case EIH Associates Hotels Vs. CIT [2013 (9) TMI 604 - ITAT CHENNAI ] wherein it was held that the investments made by the assessee in the subsidiary company are not on account of investment for earning capital gains or dividend income. Such investments have been made by the assessee to promote subsidiary company into the hotel industry. The assessee is not into the business of investment and the investments made by the assessee are on account of business expediency. Any dividend earned by the assessee from investment in subsidiary company is purely incidental. Therefore the investments made by the assessee in its subsidiary are not to be reckoned for disallowance U/s.14A r.w.r. 8D. The Assessing Officer is directed to re-compute the average value of investment under the provisions of Rule 8D after deleting investments made by the assessee in subsidiary company - Decided in favour of assessee.
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