TMI Blog2017 (3) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be reimbursed by the assessee. At the same time, we observe from the order of the Ld. CIT(A) itself wherein there is a chart of statement of expenses where for all expenses paid TDS was deducted and i.e. evident from the chart. Therefore, there is no loss to the revenue in the entire transaction. Further in the judgment of the Delhi ITAT in case of Dr. Willmar Schwabe India (P) Ltd. [2005 (3) TMI 398 - ITAT DELHI-D ] it is crystal clear proposition of law that when there is no element of income and there is mere reimbursement made there is no question of deduction of TDS. In the instant case, we arrive at our considered view that assessee made payment to CECO by way of reimbursement only. Therefore, we find no infirmity with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol panel and trading of switchgear items. The return of income for AY 2009-10 was filed on 03.02.2010 disclosing total income of ₹ 39,88,290/-. The case has been processed u/s. 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) and thereafter selected for scrutiny. Accordingly, notices u/s. 143(2) and 142(1) of the Act were issued and served upon the assessee. In response to the said notices, the Ld. AR of the assessee appeared on different dates and explained the return with regard to details filed and books of account produced. The assessment was completed u/s. 143(3) of the Act with the assessed income being at ₹ 96,21,224/-. 4. The sole grievance of the revenue is that whether the payment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for managerial support and the assessee was required to deduct TDS on it and, therefore, the payment of ₹ 49,53,046/- shown by the assessee as reimbursement of the expenses to CECO is not a reimbursement but a contractual payment or payment made for managerial support for which the assessee was liable to deduct TDS u/s. 194C of the Act. As the assessee did not deduct TDS on this payment so ₹ 49,53,046/- was disallowed by the AO u/s. 40(a)(ia) of the Act. That at the appellate stage the assessee has submitted that the AO in his assessment order has written on page 4 para 7 which is as under: All legal requirements regarding payment as deduction of TDS etc. are done by the CECO only. 6. It was submitted bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ECO on behalf of the assessee. The AO has considered these payments being made for managerial support on which the assessee was required to deduct TDS while the assessee had argued that these expenses were incurred on its behalf for which they duly deducted TDS. The Ld. CIT(A) opined that as per the judgments cited by the ITAT wherein it was held that expenditure made on behalf of the assessee and the assessee only reimbursed the expenses. In such circumstances, no deduction of tax can be made at source. The Ld. CIT(A) in view of the judgment of the ITAT held that section 40(a)(ia) of the Act is not applicable in respect of expenses reimbursed by the assessee and hence, the addition of ₹ 49,53,046/- was deleted. That being further ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by the concerned suppliers as per the specification given by the assessee company and even some printing was also done as per the assessee s requirement, the required raw material for the purpose of manufacturing the said packing material was purchased by the concerned suppliers on their own. Thus, the ownership of the said material was entirely with the concerned manufacturers till its supply to the assessee company and the contract between the assessee company and those manufacturers was that for supply of material and not for carrying out any particular work as envisaged in section 194C. It was a clear case of sale of goods by the said suppliers to the assessee and that was evident from the fact that sales tax as well as exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee. At the same time, we observe from the order of the Ld. CIT(A) itself wherein there is a chart of statement of expenses where for all expenses paid TDS was deducted and i.e. evident from the chart. Therefore, there is no loss to the revenue in the entire transaction. Further in the judgment of the Delhi ITAT in case of Dr. Willmar Schwabe India (P) Ltd., supra it is crystal clear proposition of law that when there is no element of income and there is mere reimbursement made there is no question of deduction of TDS. In the instant case, we arrive at our considered view that assessee made payment to CECO by way of reimbursement only. Therefore, we find no infirmity with the findings of the Ld. CIT(A) and the relief granted t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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