TMI Blog2023 (7) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... such reimbursement and when that reimbursement has sufficient supporting documents that no TDS is required to be deducted by the assessee on reimbursement of actual expenses incurred by the RWPL and we set aside the order passed by the ld. CIT(A). Hence, the appeal is being allowed. - ITA No. 153 to 159/JPR/2023 - - - Dated:- 28-6-2023 - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri P.C. Parwal (C.A.) For the Revenue : Smt. Monisha Choudhary (Addl.CIT) ORDER PER: DR. S. SEETHALAKSHMI, J.M. These seven appeals are filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi all dated 20.01.2023 [herein after NFAC/CIT(A) ] for assessment years 2011-12 to 2017-18 respectively. 2. Since the issues involved in these appeals of the assessee for all years are almost identical, are common, all these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter pertaining to M/s Barmer Lignite Mining Company Ltd. in ITA No. 159/JPR/2023 may be taken as a lead c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company by its JV constituent, M/s. Raj West Power Ltd. (RWPL) [now known as JSW Energy (Barmer) Limited]. 5. Assessing officer has treated the assessee company as assessee in default to the extent it did not deduct tax on expenses/payment u/s. 201(1) of the IT. Act along with levy of interest u/s. 201(1A) of the Act for all these A. Yrs. 2011-12 to A.Y 2017-18. 6. Aggrieved, assesee has filed appeal with more or less similar grounds of appeal for all these A.Yrs. 2011-12 to AY. 2017-18 and also placed reliance on similar facts and circumstances involved in non deduction of TDS on such expenses paid, contending that the same as only reimbursement of expenses on actual basis having not attracted by TDS provisions u/s 201(1)/201(1A) of 1.T. Act. A propose to the grounds so raised by the assessee the relevant findings of the ld. CIT(A) is reproduced here in below:- From the above clause it is clear that all the expenses incurred / to be incurred by RSMML under this agreement are to be borne by JV Company/RWPL. This agreement nowhere envisages any specific clause which warrants appellant company to reimburse expenses as incurred by RWPL on behalf of RSMML as appellant comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per clause 3.2 referred by the Assessing Officer in A.Y 2011-12. Even considering possibility of reimbursement, placing reliance on appellant's submissions on Board resolutions to reimburse such expenses, it would not be economically and arithmetically feasible to divide such costs as incurred by RWPL in the heads of rent/salary/hire charges/labour charges/mining charges etc. as attributable to actual expenses on quantitative basis when the expenses are incurred as a going concern by RWPL using its regular manpower and related assets of RWPL without adducing any specific contract by RWPL with appellant or others to do works of appellant. Accordingly. appellant's contentions that the expenditure incurred is only mere reimbursement of expenses having no income / gain/ advantage element etc. to the recipient is devoid of facts and merit and appellants mere claims that it is reimbursement on actual basis having no element of income is far from truth and acceptability. Accordingly, appellant's claims on this analogy is not accepted, as rightly assessed by A.O. by invoking provisions u/s. 201(1)/201(1A) of the IT Act in all these assessment years 2011-12 to 2017-18. In the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed during the appellate proceedings. Accordingly, appellant's grounds on the issue of levy of demand u/s. 201(1) are allowed to consider the appellant, that the appellant cannot be deemed as assessee in default, similar to A.Y. 2013-14 to 2017-18. With reference to levy of interest u/s. 201(1A) appellant's Grounds of Appeal are not maintainable 'as no demand u/s 201(1) of IT. Act will alter the liability to charge interest u/s. 201(1A) of the I.T. Act till the date of payment of taxes by the deductee assessee. Hence, as reasoned and discussed in detail in the assessment order, the appellant's Grounds of Appeal to seek relief u/s 201(1A) of the IT Act holding to the view that having treated assessee not in default, the same as not leviable, is not acceptable placing reliance on the Hon. Supreme Court adjudication in the case of M/s Hindustan Coca Cola Beverages vs. CIT dated 16.8.2007 as relied by the A.O. Accordingly, appellant's grounds of appeals on the levy of interest u/s 201(1A) for these A. Yrs 2011-12 to 2017-18 is not maintainable and same is dismissed for all the assessment years 2011-12 to 2017-18. In view of the above detailed discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) of the JV agreement to held that this clause do not envisage that assessee will reimburse the expenses incurred by RWPL and no specific agreement between assessee and RWPL was brought on record to prove that the reimbursement is on cost to cost basis. Submission:- 1. At the outset, it is submitted that both the lower authorities have not correctly appreciated the facts of the case. In fact, the JV agreement dated 27th December, 2006 between RSMM and RWPL only provided that both these two parties to the agreement would incorporate a JV company and such company would carry out the mining activity who/RWPL would bear all expenses incurred/to be incurred by RSMM. After incorporation of the assessee company on 19th January, 2007, when RWPL raised debit note on the assessee, the Board of Directors in its meeting dated 11th August, 2010 in para 3 of Item no. 15.9 approved to reimburse the actual expenditure incurred by RWPL with a further request to RWPL to continue to incur such expenditure in future which would be reimbursed by the assessee on a quarterly basis. Thus, the AO incorrectly observed that there is no such agreement for reimbursement between assessee and RWPL and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that Assessee had paid such sums towards administrative costs such as the employee cost, rent, finance and legal corporate recharge etc. The Tribunal noted that, GSIPL had provided services to the assessee by deploying its employees for such work and the cost was for reimbursement for such expenses besides other related expenditure. Revenue was unable to dislodge these findings of fact recorded by the Tribunal. That being the position, we must proceed on the basis that the payment in question was in the nature of reimbursement of costs. As held by the Supreme Court in the case of Director of Income Tax v/s. A. P Moller Maersk A. S. reported in 78 taxmann.com 287 and consistently followed by this Court in the number of decisions, liability to deduct tax at source in such a case, would not arise. No question of law arises. CIT Vs. Kalyani Steels (2018) 163 DTR 513 (Kar.) (HC) Para 13 to 16 of this decision reads as under- 13. It is trite that, if there is no income embedded in a payment, then TDS provisions would not apply as TDS is only an alternative method of collection of taxes. It is beneficial to refer to the judgment of this Court in the case of Hyderabad Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reads as under- What is important is that the income-tax is a tax payable in respect of total income of the previous year of every person, Further, much income-tax shall have to be deducted source or paid in advance, where it is so deductible or payable under any of the provision of the IT Act From this, it follows that unless the paid amount has any element in it, there will arise no liability to pay any income-tax. Further, in such a situation, there will also arise no liability of a source upon such amount (Para 14) deduction of tds on such expenses paid. There is no dispute or in any case, there is overwhelming material on record which establishes the following position: The C F agents have raised two separate sets of bils (4) first towards the services rendered by the C F agents; and (6) second towards the reimbursement of freight charges paid to the carriers () These are not cases where any composite bills were raised by the C F agents with indicating the service charge components and reimbursement components separately () There are ample evidences in the form of ledger entries, bills, payment vouchers etc, placed on record to establish that separate sets of bills w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity has to be resolved by accepting the position consistent with the provisions of the IT Act. If there is conflict, then, it is obvious that the provisions of the IT Act will have to prevail. Principal CIT vs. Consumer Marketing (India) (P) Ltd. (2015) 64 taxmann.com 16 (Guf) and CIT vs. Kalyani Steel Ltd (2018) 163 DTR (Kar) 513 (2019) 308 CTR (Kar) 400 concurred with. (Para 26). In view of above, interest levied u/s 201(1A) be directed to be deleted. 8. Per contra, the ld. DR relied upon the orders of the lower authorities and supported the order of the Hon ble Calcutta High court in case of Surendra Commercial Exim (P.) Ltd. vs. ITO (2022) 141 taxmann.com 23. 9. We have heard the rival contention and perused material available on record. We observed that only issue before us is that whether on reimbursement of expenditure whether TDS is to be deducted under the provisions of Chapter XVII-B of the Income Tax Act, 1961. We note that the ld. AO observed that the assessee made payment of salary expenses and other expenses incurred by RWPL without deducting tax at source and held that the assessee is in default u/s 201(1) of the Act and erred in compliance of provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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