TMI Blog2016 (3) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... ple of matching concept upheld the view of the Assessing Officer to spread the interest paid in the very first year over a period of five years because the term of the debt was five years and the Assessee therein had itself in its books of account amortized the interest over a period of five years. In Appeal, the Apex Court while reversing the decision of this Court held that normally the ordinary rule is that the Revenue expenditure incurred in a particular year is to be allowed in the year of expenditure and the Revenue cannot deny a claim for entire expenditure as deduction made by the Assessee. However, the apex Court also held that in case the expenditure is shown over a number of years and so claimed while determining its income, then it would open to Revenue only on the principles of matching concept to deal with the submission as the Assessee. It is not so in this case. The Apex Court held that once the return has been filed making a particular claim, then the Assessing Officer was bound to carry out assessment by applying provisions of the Act and he could not go beyond the return. - Decided in favour of assessee - INCOME TAX APPEAL NO.2120 OF 2013 - - - Dated:- 22-2-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-02, the Respondent Assessee was appointed by State Bank of India (SBI) as an arranger for mobilizing deposits in its India Millennium Deposits Scheme (IMDS). In turn, the Respondent Assessee was entitled to appoint sub-arrangers for mobilizing IMDs both inside and outside India. The Respondent Assessee explained that it mobilized deposits worth ₹ 1235.8 crores and SBI accordingly provided it a long term deposit of ₹ 617.9 crore for a period of 5 years. Besides, the Respondent Assessee received a sum of ₹ 22.19 crores from SBI as Arranger fees and commission. It in turn paid an amount of ₹ 37.07 crores to the sub-arrangers by way of sub-arranger fees and commission. An amount of ₹ 26.75 crores out of ₹ 37.07 crores was paid by way of sub-arranger fees and commission to non-residents. However, the Respondent Assessee had failed to deduct tax at source on ₹ 26.75 crores paid to non-residents as sub-arranger fees and commission. Therefore, the Assessing Officer invoked section 40(a)(i) of the Act for failing to deduct tax under section 195 to disallow the expenditure to the extent of ₹ 26.75 crores by Assessment Order dated 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, or regulation or administration or control or superintendence of the business. In the present case, the Tribunal, on examination of the services rendered by the sub-arrangers to the Respondent Assessee concluded that the services rendered in obtaining deposits of IMD Scheme could not be considered to be management services. In the above view, the Tribunal upheld the order of the CIT(A) and held that there could be no application of provisions of section 40(a)(i) read with section 195 of the Act in the present facts. (d). We find that section 195 of the Act obliges a person responsible for paying to non-resident any sum chargeable to tax under the Act, to deduct tax at the time of payment or at the time of credit to such non-resident. In terms of section 5 of the Act, a nonresident is chargeable to tax received or deemed to be received in India or accrued or arising in India. Section 9 of the Act describes income which is deemed to accrue or arise in India. The impugned order examined the nature of fees in the context of section 9(1)(vii) of the Act to hold that it is not a technical service as defined therein. This view of the Tribunal in the context of the services being r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent Assessee was appointed as arranger by SBI for mobilizing deposit by for its IMD Scheme. The Respondent Assessee received a sum of ₹ 22.19 crores as fees and commission from SBI for services rendered as arranger. The Respondent Assessee had in turn paid an amount of ₹ 37.07 crores by way of sub-arranger fes and commission to the subarrangers appointed. In the above view, the Respondent Assessee claimed as expenditure an amount of ₹ 14.87 crores to determine its taxable income for the subject Assessment Year. However, in its books of account, the Respondent Assessee amortized the above expenditure of ₹ 14.87 crores over a period of five years and for the subject Assessment Year, only debited ₹ 99.16 lakhs to its profit and loss account. The Assessing Officer did not dispute that expenditure had been incurred for business purposes. However, in his assessment order dated 19th March 2004 held that the expenditure of ₹ 14.87 crores had been amortized over a period of five years in the books of account i.e. in line thereto, a deduction only to the extent of ₹ 99.16 lakhs was allowable in the subject Assessment Year. (b). Being a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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