TMI Blog2021 (2) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 192 of the Act and as stipulated in para 2.4 of the original agreement. The expenses under dispute represent reimbursement of amount incurred by shared employees while they are on business tours. Shared employees can claim the said amount only after providing documentary evidence. Hence, such expenses are not liable for TDS. The disallowance u/s 40(a)(ia) of the Act is not warranted in view of the second proviso to section 40(a)(ia) of the Act r.w. first proviso to section 201(1) inserted vide Finance Act, 2012, provided the payee has (a) furnished return of income u/s 139, (b) taken into account the stated sum for computing the income in the return of income and (c) has paid the tax due on the income returned and there is a certificate of a Chartered Accountant to that effect. In the instant case, since all the conditions/requirements were complied with by the payee Pfizer Ltd. , the assessee cannot be considered as an assessee-in-default and therefore, disallowance u/s 40(a)(ia) is not warranted. - Decided in favour of assessee. - ITA No. 2586/MUM/2019 - - - Dated:- 11-2-2021 - SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N. K. PRADHAN (ACCOUNTAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07.2014 and 05.02.2015 before the AO. However, the AO was not convinced with the said reply of the assessee and passed an order u/s 143(3) r.w.s 254 holding that TDS should have been deducted on the payment of cross charges made to Pfizer Ltd. and accordingly disallowed ₹ 15,37,60,992/- u/s 40(a)(ia) of the Act. 4. In appeal, the Ld. CIT(A) observed that similar issue arose before the Tribunal in assessee s own case for AY 2009-10. Facts being identical, he followed the said order of the Tribunal and deleted the disallowance of ₹ 15,37,60,992/- made by the AO. 5. Before us, the Ld. Departmental Representative (DR) relies on the order of the AO. On the other hand, the Ld. counsel for the assessee relies on the order of the Tribunal in assessee s own case for AY 2008-09 (ITA No. 6486/Mum/2012) and AY 2009-10 (ITA No. 1535/Mum/2015) and supports the order passed by the Ld. CIT(A). 6. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. We find that the assessee paid cross charges amounting to ₹ 15,37,60,922/- to Pfizer Ltd. in terms of the cost sharing agreement dated 21.11.2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 201(1) inserted vide Finance Act, 2012, provided the payee has (a) furnished return of income u/s 139, (b) taken into account the stated sum for computing the income in the return of income and (c) has paid the tax due on the income returned and there is a certificate of a Chartered Accountant to that effect. In the instant case, since all the conditions/requirements were complied with by the payee Pfizer Ltd. , the assessee cannot be considered as an assessee-in-default and therefore, disallowance u/s 40(a)(ia) is not warranted. In CIT v. Ansal Land Mark Township (P.) Ltd. [2015] 61 taxmann.com 45 (Del), ACIT v. Gitanjali Exports Corporation Ltd. [2017] 81 taxmann.com 452 (Mumbai) and Mahindra Mahindra Ltd. v. DCIT [2019] 107 taxmann.com 134 (Mumbai), it is held that second proviso to section 40(a)(ia) is declaratory and curative in nature and has retrospective effect. 6.1 We may refer here to the order of the Tribunal in assessee s own case for AY 2009-10, wherein it is held that : 19. We have carefully considered the rival submissions. Factually speaking, in para 1.3.6 of his order, the CIT(A) has tabulated details of the expenditure of ₹ 14,51,77,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sailed, the ratio of the decision of the Mumbai Bench of the Tribunal in the case of Bayer Material Science Pvt. Ltd. (supra) as well as the reasoning approved by the Hon'ble Bombay High Court in the case of CIT vs. Siemens Aktiongesellschaft (supra) clearly supports the conclusion drawn by the CIT(A) that there was no default on the part of the assessee in not deducting tax at source on the impugned payments to M/s. Pfizer Ltd. In this view of the matter, we, therefore, find no reasons to interfere with the ultimate conclusion of the CIT(A) in setting-aside the disallowance made by the Assessing Officer by invoking Sec. 40(a)(ia) of the Act. Thus, on this aspect, Revenue fails in its appeal. 20. Before parting, we may also refer to another aspect noted by the CIT(A). The CIT(A) noted the second proviso to Sec. 40(a)(ia) of the Act inserted by the Finance Act, 2012 which prescribes that if an assessee fails to deduct tax at source, but is not deemed to be an assessee in default as per the first proviso to Sec. 201(1) of the Act, then, no disallowance u/s 40(a)(ia) of the Act is required to be made in respect of such expenditure. The CIT(A) referred to the first proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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