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TMI Blog2018 (3) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial activities, it entered into contracts with M/s. DLF Land Limited, a sister concern. The latter is tasked with the responsibility of rendering certain services towards procurement of land, and carrying out secretarial, administrative and inventory management activities like maintenance of books of accounts, getting accounts audited, maintenance of secretarial records, filing of various statutory returns, managing bank accounts, taking steps towards obtaining license relating to land from various statutory authorities etc. The agreements entered into by the assessee entitled it to service charge @ 5% of total expenditure incurred. Besides that, the concern was also entitled to full reimbursement of expenses claimed. The amount paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case specifically held that "reimbursement of expenses can, under no circumstances, be regarded as revenue receipt" and therefore, it is not liable to income tax. The Court relied upon the Supreme Court's decision in CIT v. Tejaji Farasram Kharawalla Ltd., [1968] 67 ITR 95 (SC), where the Court had held that it is only the amount that exceeds the expenditure incurred by the agent that would be liable to tax. More recently, this Court in Fortis Health Care Ltd. (supra) has also held that amount received towards reimbursement of expenses is not taxable under the Act. 19. In the instant case, it is undisputed that M/s DLF Land Ltd. had deducted TDS on the payments made by it under various heads on behalf of the assessee. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsively by Section 194J (3) Explanation (a)). Neither provision obliges the person making the payment to deduct anything from contractual payments such as those made for reimbursement of expenses, other than what is defined as "income". The law thus obliges only amounts which fulfil the character of "income" to be subject to TDS in such cases; for other payments towards expenses, the deduction to those entitled (to be made by the payeee) the obligation to carry out TDS is upon the recipient or payee of the amounts. 21. The facts of this case are identical to those in Gujarat Narmada Valley (supra) and for the reasons stated above, this Court does not find any compelling ground to arrive at a different conclusion. Thus, the ITAT̶ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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