TMI Blog2012 (11) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 30-11-2012 - SHRI I.P.BANSAL, JUDICIAL MEMBER SHRI SANJAY ARORA, ACCOUNTANT MEMBER For the Appellant: Shri Kirit Kamdar For the Respondent: Shri Pravin Varma ORDER PER I.P.BANSAL, J.M This is an appeal filed by the assessee. It is directed against order passed by Ld. CIT(A)-2, Mumbai dated 18/07/2012 for the assessment year 2008-09. The grounds of appeal raised by the assessee read as under: Based on the facts and circumstances of the case, Mahyco Monsanto Biotech (India) Ltd ('Appellant') craves leave to prefer an appeal against the order passed by the Learned Commissioner of Income-Tax (Appeals) - 2 ['CIT(A)] under section 250 of the Income-Tax Act, 1961 ('the Act') in respect of the order passed by the Additional Commissioner of Income-Tax -1(2), Mumbai ('AO') under section 143(3) of the Act, on the following grounds: Ground 1: Disallowance under section 40(a)(ia) of the Act for reimbursement of expenses ₹ 8,37,22,826/- On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in upholding the action of the Assessing Officer in disallowing expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 252/Mum/2009 dated 21/5/2010. (b) CIT vs. Siemens Aktiongesellchaft , 310 ITR 320 (Bom) 2.3 However, Ld. AO has distinguished the aforementioned decisions on the ground that Hon'ble Bombay High Court did not consider the issue regarding disallowance under section 40(a)(ia), but the issue was in respect of royalty. Ld. CIT(A) has upheld the action of AO. The assessee is aggrieved, hence, in appeal. 3. It may also be mentioned here that AO did not dispute the fact that the aforementioned amounts are in the nature of reimbursement as AO himself has noted in the assessment order in para 3.1 that these payments are in the nature of reimbursement. The AO has excluded a sum of ₹ 86,21,890/- paid by it to M/s. Mahyco Seeds Ltd. as the TDS was deducted on the said amount and the balance amount of ₹ 8,37,22,826/- was disallowed out of aforementioned amount of ₹ 9,23,44,716/-. 4. After narrating the facts it was submitted by Ld. A.R that AO himself has accepted that these payments are in the nature of reimbursement and if it is so, disallowance under section 40(a)(ia) not to be made relying upon aforementioned two decision. He submitted that AO has wrongly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14,44,510/- vide order dated 31.12.2008 passed u/s.143(3) of the Act. On appeal, before the ld. CIT(A) the assessee interalia submitted that the assessee company is not liable to deduct any TDS on such reimbursement of expenses due to the fact that as per the arrangement with M/s. J.B. Boda Co. Pvt. Ltd., the parent company of J.B. Boda group of companies, incurs all management, administrative expenses on behalf of all group companies who share the common facilities and then recovers it from the respective participants on actual basis as far as possible. It was further submitted that M/s. J.B. Boda Co. Pvt. Ltd. which is actually making the payments for the expenditure has been deducting tax at source and hence, complies with the provisions of deducting tax at source. It was further submitted that if the deduction is made by the assessee then it would amount to double deduction. The reliance was also placed on (i) ACIT vs. Modicon Networks P. Ltd. 14 SOT 204 (Del.); (ii) DECTA, In re 237 ITR 190 (AAR) and (iii) SEDCO Forex International Drilling Inc. vs. DCIT 72 ITD 204(Del.). The ld. CIT(A) while observing that the expenses reimbursed by the group compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or actual service provider. Therefore, the payments made to M/s. J.B. Boda Co. Pvt. Ltd. do not fall within the purview of section 40(a)(ia) of the Act. In M/s. Crowe Boda Company (supra), it has been held by the Tribunal vide para-6 of its order dated 30.3.2010 as under :- 6. On plain reading of above section, we find that any interest, commission or brokerage, rent, royalty fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub- contractor being resident for carrying out any work including supply of labour for carrying out any work on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or after deduction has not been paid within stipulated period. In the case under consideration, the Assessing Officer did not specifically point out as to under which clause or under which sub-section of section 40 the claim of the assessee was disallowed. The contention of the assessee is that the payment made to parent company, M/s. J.B. Boda Co. Pvt. Ltd. is payment of reimbursement of expenses and not against carrying out any contract work as a contractor or sub-contractor, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above discussion, we do not find any infirmity in the order of CIT(A) in deleting the disallowance of ₹ 29,58,608/- on account of reimbursement made to parent company M/s. J.B. Boda Co. Pvt. Ltd. In the absence of any distinguishing feature brought on record by the revenue, we for the reasons as discussed above and respectfully following the order of the Tribunal hold that the assessee is not liable to deduct TDS on the reimbursement of expenses and accordingly we are inclined to uphold the finding of the ld. CIT(A) in deleting the disallowance made by the Assessing Officer . The grounds taken by the revenue are therefore, rejected. 4.1 Thus it was pleaded by Ld. A.R that the issue is covered by aforementioned decision. He submitted that noting this fact it was observed by the ITAT in the order that prima facie the case is in favour of assessee. Thus it was pleaded by Ld. A.R that addition should be deleted. 5. On the other hand, Ld. D.R relied upon the order passed by the AO as well as Ld. CIT(A). 6. We have carefully considered the rival submissions in the light of material placed before us. We have carefully gone through the assessment order. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 3794576/- ============ 7.1 The AO rejecting the claim of the assessee and disallowed the aforementioned amount under section 43B of the Act. 7.2 The Ld. CIT(A) has upheld the aforementioned addition on the ground that even in the assessment proceedings / remand proceedings the assessee did not submit complete vouchers of expenses for verification by the AO as only copy of ledger account and some sample vouchers were produced for verification. 8. It is the case of Ld. AR that sample vouchers were filed only by way of example and AO never required the assessee to file all vouchers. He submitted that assessee is in a position to submit all vouchers and the matter may be restored back to the file of AO for verification. 9. On the other hand, Ld. DR relied upon the order of AO and Ld. CIT(A). 10. After hearing both the parties and considering the interest of justice we restore this issue to the file of AO with a direction to give an opportunity to the assessee to submit all the vouchers. After verifying the same AO will re-adjudicate the issue regarding disallowance of impugned amount in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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