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TMI Blog2012 (7) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... e aY 2006-07 are reproduced hereunder: (a) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has failed to appreciate that the liability of the payer to make deduction of tax is absolute and any personal arrangement between payer and payee can not absolve the payer from deducting tax as his statutory liability. (b) On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in holding that TDS is not applicable on the payment of core service charges by M/s. Vishinda Diamonds to MIs. Dilipkumar V. Lakhi as no income is generated to M/s. Dilipkumar V. Lakh i. (c) On the facts and in the circumstances of the case and in law the Ld CIT (A) has failed to appreciate that the value addition charges on the rough diamonds also fall under article 13 of India - UK tax treaty and therefore, the nature of core service charges is not disputed. (d) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that there is no provision in the I.T. Act for exemption from the TDS from the payment by one assessee to the payee for 'Core Service Fees' wherein, the same has been debited by the assessee from P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and paid. ii) Purchases were effected by two companies and according to the ratio of their purchases; the expenses paid by Shri Dilipkumar V Lakhi were 'reimbursed' by the firm M/s. Vishinda Diamonds as expenses were incurred by Shri Dilipkumar V. Lakhi and on behalf of Mis. Vishinda Diamonds. It shall not be out of place to mention that there Is no element of any services by Shri Dll!pkumar V. Lak1 to M/s VisIiinda Diamonds." 6.1 Apart from this, the assessee has also contended before the Assessing Officer that since the total value added service charges were paid by Shri Dilipkumar V Lakhi after deduction of tax at source and paid to the credit to the revenue; therefore, there is no revenue loss on the said amount; otherwise it shall be a case of double deduction of tax on the same transaction. 6.2 The Assessing Officer did not accept the explanation of the assessee and held that the assessee is to be deemed as an assessee in default in respect of the tax which was required to be deducted and also liable to pay simple interest as per the provisions of sec. 201(1) and 201(1A) of the I T Act. 7 On appeal, the Commissioner of Income Tax(Appeals) has held that the payment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity or the certificate issued under sec 197 of the Act on 28.3.2006 for Rs 44,23,570/- was in force upto 31st March 2006 only. Whereas the amount of Rs.44,23,570/- was remitted to Mr. Dilipkumar V. Lakhi on 23rd January-2006 i.e. well before the issuance of the above mentioned certificate. Under the circumstances, the contention of the assessee is rejected and the total amount of Rs.59,45,937.43 paid Mr. Dipumar V. Lakhi as Core Service tee are liable for TDS under sec. 194-J of the I T Act and accordingly brought to tax along with interest Under sec. 201(1A) of the Act. On verification, it is further noticed that the assessee has deducted TDS rate on payment made to M/s. Kone Elevators India Ltd. The interest on such delayed payment of Rs. 6,080/- is recovered from the assessee(Rs. 1404 on 24.7.2007 and Rs. 5,373/- on 23.10.2008)". 8.1 It is clear from the findings of the Assessing Officer that the he has not disputed the fact that the original payment was made by the sister concern of the assessee after deducting the tax @ 15% and the assessee has made the reimbursement of the same to the sister concern, which is already subjected to TDS. When there is no element of margin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on & Co. [2006] 5 SOT 393 (Mumbai). 7.2 Based on the above, it is amply clear that the nature of payment made by the appellant to its sister concern is reimbursement. The entire correspondence along with the bills also supports the contention. The Assessing Officer failed to appreciate the nature of payment made by the appellant. The Assessing Officer has merely acted upon the nomenclature of the payment and held that on this payment tax u/s. 194J should have been deducted. The Assessing Officer also failed to establish how the payment made by the appellant has become income to the recipient as the recipient has already paid this amount to the Diamond Trading Company on behalf of the appellant. It is also a fact that this payment is also not against any services rendered by the recipient to the appellant. In absence of both such situations, the provisions of T.D.S. cannot be applicable on the payment. Moreover, Shri Dilipkumar V. Lakhi, recipient had already paid the core service fees after deducting tax @ 15% as per article 13 of the India - UK tax treaty. The TDS deducted is paid to the credit of Central Government accordingly. Any further as proposed by the Assessing Officer wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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