9911796707
TMI Blog2023 (1) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of Rs.63,57,485/- made by the Assessing Officer under section 40(a)(ia) of the Act, 1961, on account of non-deduction of tax at source on amounts paid for its expat employees?" 3. Brief facts of the case are that, the assessee filed return for the Assessment Year 2012-13 declaring the loss at Rs. 2,05,77,857/-. The notice u/s 143(2) of the Act followed by notice u/s 143(2)/143(2)(1) of the Act along with questionnaire were issued and assessment proceedings were initiated against the assessee. The assessment order came to be passed on 25/03/2015 by making an addition of Rs. 2,72,66,619/- being difference between receipts as per 26AS and as per books of accounts/audited accounts, is income of the assessee u/s 28 of the Act, disallowed the miscellaneous expenses car running and maintenance disposal to the tune of Rs. 14,09,500/-, disallowed sum of Rs. 63,57,485/- u/s 40(a)(ia) of the Act due to non deduction of tax at source on salary paid to expats. The assessment order came to be passed on by computing the total income of the assessee of Rs. 1,59,93,050/- as against declared returned loss of Rs. 2,05,77,859/-. 4. As against the assessment order 25/03/2015, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to place on record any Documentary evidence to support its above statements. Further the assessee has claimed that it adjusted the current year difference with the excess income recognized in the previous years which is not supported by any documentary evidence. Thus on the basis of the above facts and legal provisions, the amount of Rs.2,72,66,619/- being the difference between receipts as per 26AS and as per books of account/audited accounts, is income of the assessee u/s 28 of the Income Tax Act and is added back to the income of the Assessee." 10. It is the specific case of the assessee is that the Ld. A.O. has called upon the assessee to furnish explanation with documentary evidence regarding the difference in receipts as per books of account and as per Form 26AS. The assessee in reply submitted reconciliation between the income and TDS as per the audited financial statement for preceding five years i.e. form Financial Year 2007-08 to Financial Year 2011-12 and income as per Form No. 26AS which has been reproduced before us at Page 24 of the paper book. It can be seen from the comparative chart that income excluding the service tax as per the audited financials of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has committed no error in deleting the disallowance of Rs. 2,72,66,619/-. Ergo, we find no merit in the Ground No. 1 of the Revenue. Accordingly, Ground No. 1 is dismissed. 12. Ground No. 2 is regarding deletion of the disallowance of Rs. 63,57,485/- made by the A.O. u/s 40(a)(ia) of the Act on account of non deduction of tax at source on the amount paid for its expat employees. The Ld.CIT(A) while deleting the said disallowance, relied on the Assessee's own case for Assessment Year 2014-15 in following manners:- "7.2 .Ground No 5 relates to disallowance under section 40(a)(i) of the Income Tax Act, 1961 an amount of Rs. 63,57,485 towards expenditure incurred by the appellant on account of social security contributions payable outside India alleging non-deduction of tax at source. 7.3. Similar issue had arisen in the appellant's own case for A.Y. 2014-15 which was decided by the undersigned vide order dated 01.08.2018 in Appeal No: 10900/564/CIT(A)~7/Del/2016-17, wherein the it was observed as under: "4.2. The appellant, during FY 2013-14 (AY 2014-15) had incurred expenditure of Rs.32,82,022/- towards social security contributions payable outside India for expatriates wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 40 of the Act is also the same". 4.6. The appellant is of the view that there is no requirement for the appellant to deduct TDS on Social Security Contributions paid by it and no inadmissibility of expense arises u/s 40 of the Act in regard to such contributions since this was not taxable in the hands of the individuals. The appellant relied on the case of Yoshio Kubo vs. CIT. The Delhi High Court in the case of Yoshio Kubo i/s. CIT has answered a specific query that: Are contributions for social security/ pension/ medical insurance made in the home country by the employer for an employee seconded to India taxable as part of the salary (perquisite) 4.7. The HC held that such contributions are not a perquisite as no benefit is vested in the employees at the time the contributions are made. The HC opined that the judgment of the SC in L. W. Russel applied. The HC said that the SC ruling spelled out a wider fundamental principle, i.e. when an amount does not result in a direct present benefit to an employee but assures him of a future benefit in the event of a contingent occurrence, the payment made by the employer is not vested in the employee. The HC also relied on its judge ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
