New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2017 (3) TMI 263 - ITAT KOLKATA

2017 (3) TMI 263 - ITAT KOLKATA - TMI - TDS u/s 194C - TDS liability - expenses reimbursed by the assessee - nature of expenses - Held that:- There existed a royalty-cum-reimbursement agreement between the assessee and CECO and as per the said agreement certain service charges for contract job work were to be reimbursed by the assessee to CECO e.g. (i) royalty for use of the name of CECO, (ii) reimburse of direct expenses made exclusively by CECO for the business of the assessee and (iii) paymen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n 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 findings of the Ld. CIT(A) and the relief granted to the assessee is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

296/CIT(A)-XX/Wd-34(3)/2011-12/Kol dated 19.11.2012 on the following grounds: 1. The order of the Ld. CIT(A) is erroneous both on question of law and facts. 2. Ld. CIT(A) has failed to appreciate that even if the expenses made by CECO Electronics (P) Ltd. on behalf of Control Engineering Co. is considered to be genuine, it does not change the nature of payment made by the assessee to M/s. CECO Electronics (P) Ltd. The nature of payment is contractual and the assessee is required to deduct TDS o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

otal 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 Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the assessee being considered but is not acceptable to the AO due to the following reason: (i) the payment of ₹ 49,53,046/- made by the assessee to CECO is reimbursement of expenses as shown by CECO in its P&L Account as receipt or income and expenses are claimed against this income by CECO; (ii) the Ld. AR of the assessee did not able to give any supporting bill raised by CECO for reimbursement of the expenses to the assessee; (iii) all legal requirements regarding payment as dedu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

akes payment against it. The AO came to the conclusion that the nature of payment is contractual payment or payment 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 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

one time tax deduction is required on each expenditure and that was done. There is no provision in the Income Tax Act for deduction of income tax twice on same expenditure. The assessee further submitted that many of the reimbursed expenditu5re like electricity payment, telephone bill payment, local conveyance expenditure are out of the provision of TDS but the AO has added all such expenditure also. It was further argued that the AO has stated the reimbursement was shown in the P&L Account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on two Tribunal decisions (i) ITO Vs. K. M. Varghese & Co., ITA No. 4091/Mum/2010 and (ii) ACIT Vs. Minpro Industries, ITA No. 394/Jodh/2008. The Ld. CIT(A) in his order after considering the assessment order and submission of the assessee observed that certain payments were made by the assessee to CECO in respect of expenses incurred by CECO 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 whil .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee and hence, the addition of ₹ 49,53,046/- was deleted. That being further aggrieved, the revenue is in appeal before us. 7. The Ld. DR submitted that as had been put forth before the subordinate authorities and relied on the order of the AO. The Ld. AR reiterated the submissions made before the Ld. CIT(A) and relied on his order. That furthermore, the Ld. AR referred to the decision of ITAT, Delhi Bench in the case of ITO Vs. Dr. Willmar Schwabe India (P) Ltd. (2005) 3 SOT 71 ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essee company and those suppliers was for sale of goods and not for work as envisaged in section 194C of the Act. It was held yes, whether, therefore, section 194C was not applicable and assessee was not required to deduct tax at source under that section-held yes. The ITAT, Delhi Bench in this case has held that here was the situation where various packing materials were procured by the assessee company during the year under consideration from several manufacturers where regularly manufacturing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e 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 excise duty was paid by the concerned suppliers on the packing material supplied to the assessee company wherever applicable. The CBDT itself in clause 7(b) of its Circ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version