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ACIT. Circle-24 (1) , New Delhi Versus Dinesh Kumar Mathur

2016 (3) TMI 207 - ITAT DELHI

TDS u/s 195 - Addition u/s 40(a)(ia) - amount reimbursed to M/s Aakriti Creations Pvt. Ltd - whether these are genuine reimbursement of expenses and there was no profit element and hence no income liable to tax was contained therein ? - Held that:- Hon’ble Delhi High Court in case of Van Oord ACZ India (P) Ltd. vs. Commissioner of Income Tax [2010 (3) TMI 167 - DELHI HIGH COURT] held that liability to deduct at source arises only when the sum is paid to the non-resident was chargeable to tax. On .....

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ion of tax at source arose under Section 195 in the case of mobilization and demobilization costs reimbursed to a non-resident, not being taxable in India, hence disallowance under Section 40(a)(ia) did not arise.

Recently, in case of CIT vs. Ansal Land Mark Township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] it was held that what is common to both proviso to Section 40(a)(ia) and Section 210(1) of the Act is that as long as the payee/resident has filed its return of income disclo .....

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CHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Raman Kant Garg, SR. DR For The Respondent : Sh. R. B. Mathur, C.A. ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the Revenue against the order dated 28/9/2011 passed by the Ld. CIT(A) s XXIII, New Delhi. 2. The grounds of appeal are as under:- 1. On the facts and on the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 3,19,66,460/- u/s 40(a) (ia) of the I.T. Act for the amou9nt reimbursed to M/s .....

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led to deduct tax on this payment. The Assessing Officer was of the opinion that there was a liability to deduct tax u/s 194C of the Income Tax Act, 1961 on the contractual payment of reimbursement of manufacturing expenses. The Assessing Officer, therefore, proposed to disallow the payment of ₹ 3,19,66,460/- u/s 40(a) (ia) of the Income Tax Act, 1961. The assessee contended before the Assessing Officer that M/s Akriti Creations Pvt. Ltd. raised separate monthly bills for the reimbursement .....

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961 as in that case separate bills were raised for actual expenses and for technical/professional fees. However, the Assessing Officer distinguished the ratio of the judgment, holding that it pertained to a case of reimbursement of fees for professional/technical services under section 194J of the Income Tax Act, 1961, as against the assessee s case which was covered under section 194C of the Income Tax Act, 1961. The Assessing Officer further noted from the balance-sheet of M/s Akriti Creations .....

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tion of tax has to deduct from the entire sum paid or credited and not merely from the income component of the same. The Assessing Officer also relied on CBDT Circular No. 715 dated 8/8/1995 the total amount paid on account of reimbursement of expenses of ₹ 3,19,66,460/- was disallowed u/s 40(a) (ia) of the Income Tax Act, 1961. 4. Aggrieved, by the said order the assessee filed appeal before the CIT(A). The CIT(A) held that the amount of 2% required to be deducted by the buyer out of the .....

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other hand relied on a number of judgments including Hon ble Apex Court and Jurisdictional High Court. The Hon ble Delhi High Court in the judgment reported at 323 ITR 130 held that no liability for deduction of tax at source arose u/s 195 of the Income Tax Act, 1961 in the case of mobilization and de-mobilization cost reimbursement to a no resident not being taxable in India. Hence, disallowance u/s 40(a) (ia) of the Income Tax Act, 1961 did not arises. The CIT(A) has taken into account all th .....

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r and stated that the Ld. CIT(A) has taken into consideration all the contentions and the factual aspects of the assessee s case. The AR also relied upon the various cases laws. 7. We have perused all the records and proceedings as well as heard both the parties. The Assessing Officer did not dispute the genuineness of the reimbursement of expenses to M/s. Akriti Creations Pvt. Ltd. There are no adverse comments or findings of the Assessing Officer in this regard and did not dispute the fact tha .....

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