TMI Blog2017 (7) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... ve offered this receipt to tax. The burden lies on the AO to verify whether the said AAI offered the payment received from the assessee to tax or not. - Decided against revenue TDS u/s 194A - Non-deduction of TDS on interest payments - whether reimbursement of actual expenses made to the Co venture are not subjected to TDS and not covered by section from 194A ? - Held that:- In the present case, ITD Cementation India Ltd. is a sister concern of the assessee. The said sister concern arranged loan from IDBI to the assessee and the impugned amount is to be paid to IDBI towards bank guarantee, commission, bank charges and interest by the sister concern and the same were reimbursed by the assessee to its sister concern. There is no element of income in such payments. Therefore, we see reason to interfere in the order of CIT(A) and it is justified.- Decided against revenue - ITA No. 1462/KOL/2014 - - - Dated:- 12-7-2017 - Shri J. Sudhakar Reddy, A.M. Shri S.S. Viswanethra Ravi, J.M. Revenue by : Shri Sourabh Kumar, Addl. CIT (DR) Assessee by : Disha Kedia, ACA ORDER Shri S.S. Viswanethra Ravi, JM This appeal by the revenue against the order dated 28.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights and collected rent for the use of the said site by the assessee during the pendency of the contract. The AO also observed that the AAI is the ultimate owner of the land and has every right to regulate the use of the land and as such for having full possession of the said land with the assessee and treated the said amounts as rent paid by the assessee and accordingly for not deducting TDS, the AO treated the assessee in default vide his order dated 28.03.2013 passed under section 201(1) / 201(1A) of the Act. 6. Aggrieved by the order of the AO, the assessee challenged the same before the CIT(A). The assessee contended that AAI treated the payments made to the assessee as contractual payments and said payments were made deducting TDS as per section 194C of the Act. The impugned amount was deducted by the AAI from running accounts bills and the assessee did not make any payments to AAI and in support of which copies of extracts as SOF were submitted and relied on the decision of Hon ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. reported in 293 ITR 226 and submitted the revenue cannot recover tax from deductor when the deductee has already paid tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant and therefore liable for deduction of TDS, even though admittedly the amounts were directly deducted by AAI from the Running Bills and then payment released to it. The first contention of the Appellant is that the amount deducted by the AAI was disputed, secondly it was not in the nature of payment covered by section 194I and that it since the funds were not in control of the Appellant and amount deducted directly from its RA Bills, it could not have deducted TDS and lastly that since the payment would have been disclosed by AAI in its income as it was a Government enterprise, the Appellant could not be held to be assessee in default for non deduction of TDS on the same. While from the facts and evidences on this issue it is clear that the amounts in question were being deducted by the AAI from the Running Bills of the Appellant towards rent as per terms of the contract with the Appellant, however the quantum charged by the AAI has been disputed by the Appellant and the final Arbitral Award was in favour of the AAI, which has been challenged by the Appellant before the District Judge of Barasat. It is also seen that there was no separate agreement for payment of Rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payee. Thus, rent for the purposes of section 194I, is essentially a payment for the use of any land or building. In other words, the agreement or arrangement which gives rise to the payment of rent, must necessarily be an agreement or arrangement predominantly for the use of land or building. However, where the agreement is not predominantly for the use of land or building, but for something else, then payment under that agreement will not constitute rent even if that something else involves the use of land or building as an integral part of or incidental to the predominant objective of the agreement. Now in the Appellant s case, the contract was for construction of the Airport Terminal and the disputed amount was being charged as rent by the AAI towards use of certain area and facilities as per the Contract Agreement, therefore clearly the Contract was for construction of the Terminal and the payments subject to TDS u/s 194C, the disputed Rent amount charged by the AAI was only incidental to it. Therefore if the ratio of the above decisions is applied in the instant case, the Appellant was not liable to deduct TDS u/s 194I. Furthermore on the facts of the case of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in default as the recipient AAI is a Govt. Public Sector Enterprise which is stated to have offered this receipt to tax. The burden lies on the AO to verify whether the said AAI offered the payment received from the assessee to tax or not. Therefore, we find no infirmity in the impugned order of CIT(A) and it is justified. Accordingly ground no. 1 raised by the Revenue is dismissed. 10. Ground No. 2 is relating to deletion of an addition of ₹ 13,44,512/- on account of non-deduction of TDS on interest payments. 11. During the course of scrutiny proceedings, the AO found that the assessee had paid an amount totalling to ₹ 1,05,49,032/- consisting of bank guarantee commission, bank charges interest, conveyance and travelling as administrative expenses to the ITD Cementation India Ltd. In explanation, the assessee submitted the ITD Cementation India Ltd. is a co- venturer of assessee (ITD-ITD CEM JV) was reimbursed by the assessee to its co-venturer ITD Cementation India Ltd. and filed details of the same. The AO not satisfied with the submissions of the assessee and opined the said payments cannot be treated as reimbursement as the assessee company is making payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amounting to ₹ 1,01,219/- the assessee has deducted tax amounting to ₹ 2,094/- at source and the said payment has not been disallowed by the AO. The other two payments are towards payment of customs duty and other expenses paid by the agent for/on behalf of the assessee. These reimbursement expenses were not made towards any services rendered by the agent, but have been made to set off of the expenses incurred by the agent while clearing the imported goods from the customs for/on behalf of the assessee. Since no element of income is embedded in reimbursement of expenses incurred by agency for/on behalf of the assessee, the assessee was not obliged to deduct tax at source, and, therefore, the CIT(A) has rightly deleted the addition. Similar view has been taken by the ITAT Mumbai in Utility Powertech Ltd. vs CIT supra as under: 5. We have considered the rival contentions and perused the record. The jurisdictional High Court in the case of CIT vs Seimens Aktiongesellschaft (supra) has held that reimbursement of expenses cannot be regarded as revenue in the hands of the payee. While deciding the issue, the Hon ble High Court has followed the decision of Hon ble Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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