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TMI Blog2023 (7) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... of other cases are exactly identical except the difference in the amount of levy of penalty in other assessment year. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 159/JPR/2023 is taken as a lead case. The assessee has raised following ground:- "1. The Ld. CIT(A), NFAC has erred on facts and in law in not accepting the contention of assessee that no TDS is required to be deducted by the assessee on reimbursement of expenses incurred by M/s Raj West Power Ltd. and thereby confirming the levy of interest u/s 201(1A) at Rs. 34,696/-. 2. The appellant craves to alter, amend & modify any ground of appeal. 3. Necessary cost be awarded to the assessee." 4. Brief facts of the case are that the assessee company M/s. Barmer Lignite Mining Company Limited (BLMCL) has been incorporated as joint venture company of M/s. Rajasthan State Mines and Mineral Limited and M/s. Raj West Power Ltd. in the ratio of 51:49. The assessee deductor company has engaged in development, operation and extraction of lignite from mining blocks situated in Barmer District of Rajasthan. This li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other stake holders referred in the J.V. clauses in a comprehensive manner. In fact RWPL acts as lead constituent of J.V. formation as per clause (c) of J.V. agreement dated 27.12.2006 with Government of Rajasthan (GOR). In view of this it is neither a simple agreement having no element of income component involved in these expenses incurred or reimbursed nor it establishes with any verifiable proofs that a fiscal duty is cast as accrued on appellant company to pay any amounts expenses to M/s. RWPL as claimed. Accordingly, any payments made by appellant company to RWPL under the guise of rent/hire charges/mining charges/labour charges/personal expenses etc. are to be treated as expenses paid by appellant company to its JV constituent without any basis of specific exclusion from TDS provisions on such payments in the guise of reimbursement of expenses and accordingly, AOS invocation of provisions u/s. 201(1)/201(1A) of the I.T. Act is well within the provisions of TDS of the I.T. Act as applicable to A. Yrs. 2011-12 to 2017-18. The appellant company could not bring on record any specific agreement between appellant company and RWPL which envisages incurring of expenses on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14 to 2017-18 the appellant has submitted certificate of Chartered Account as per the first proviso u/s. 201(1) certifying that M/s. Raj West Power Ltd. has filed its due return of income for these A Yrs. 2013-14 to 2017-18 and accordingly the sums received by M/s. Raj West Power Ltd. from appellant Co. having taken for computing its income. Considering the same, the A.O has not treated the appellant company as 'deemed assessee in default resulting in non levy of demand u/s. 201(1) for A.Y. 2013-14 to 2017-18. However, for A.Y 2011-12 and 2012-13 as appellant could not submit such certification, same was considered for levy of demand u/s. 201(1). During the pendency of appeal proceedings, for these two assessment years, the appellant has submitted the same as additional evidence involving such certification for these two assessment years as submitted before AO for AY 2013-14 to 2017-18 in Form No. 26A which is as detailed in the submissions of these assessment years brought out in the relevant appellate orders of AY. 2011-12 and 2012-13 Hence considering the reasonableness of same and keeping in view the fact that the same has been already allowed by Assessing Officer for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al on levy of interest u/s, 201(1A) of the 1.T.Act for all these assessment years 2011-12 to 2017-18 are dismissed. In the result the appeal of the appellant for AY 2011-12 is partly allowed." 7. Feeling dissatisfied from the order of the ld. CIT(A), the assessee has filed these appeals as per grounds mentioned hereinabove. The ld. AR of the assessee in support of the grounds so raised as also filed a detailed submissions which is reproduced hereinbelow:- "Assessee was incorporated on 19th January, 2007 as a Joint Venture company (JV) with RSMM Limited (a government undertaking) and M/s Rajwest Power Limited (RWPL) (now known as JSW Energy {Barmer} Limited - JSWEBL) as shareholder to carry out lignite mining activities at Kapurdi and Jalipa Mines at district Barmer. 2. As per clause 3.1(vi), RSMML and RWPL jointly agreed to depute its employees required by JV Company for implementation of the mining project. The JV Company shall not recruit persons directly on its own. In terms of this agreement, RWPL provided management support and deputed its employees required by the assessee. Accordingly, Board of Directors of the assessee in its meeting held on 11th August, 2010 approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarterly debit note for actual reimbursement of salary of the employees deputed by it and also of various other expenditure incurred by it for and on behalf of the assessee. From the details placed at PB 31-123 it can be noted that along with the debit note raised for reimbursement of salary, RWPL has further provided the name of the employee and the actual salary paid to these employees for which reimbursement is claimed. Further, from the details placed at PB 124-157 it can be noted that along with the debit note raised for reimbursement of other expenses, RWPL has further provided the bills and vouchers of all these expenses for which reimbursement is claimed. This is further certified by Senior Manager (Head F&A)where it is certified that assessee has paid various amounts to RWPL towards salary and reimbursement of other expenses which has been netted off from the relevant expense head. Thus, the amount paid by the assessee is actual reimbursement of expenses without any element of income and therefore, section 194C or any other TDS provision is not attracted on the reimbursement of actual expenses. Further, RWPL has deducted tax at source on the salary paid to its employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come" for the purpose of deduction of tax at source at all. The purpose of deduction of tax at source is not to collect a sum which is not a tax levied under the Act, it is to facilitate the collection of tax lawfully leviable under the Act". In view of the factual finding of the appellate authorities that the payment made by KSL and ML to HSL for various expenses incurred would be a reimbursement and not a fee for technical services, s. 194J of the Act is not attracted. 14. The CBDT in the Circular No. 715, dr. 3rd Aug., 1995 [(1995) 127 CTR (St) 13] has clarified that the reimbursement cannot be deducted out of the bill amount for the purpose of TDS The AO's view is against the intent of the said circular. 15. This Court in Karnataka Power Transmission Corporation Ltd vs. Dy. CIT (2016) 288 CTR (Kar) 77 (2016) 139 DTR (Kar) 33 (2016) 383 ITR 59 (Kar) while considering the applicability of s. 1944 of the Act has observed that, s. 1944 of the Act mandates the tax deductor to deduct income-tax on any income by way of interest other than income by way of interest on securities. The phrase 'any income' and 'income tax thereon' if read harmoniously, it would ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first set of bills ie, towards the services rendered by the C&F agents without any dem (x) Even in cases where composite bills were issued or where there was any ambiguity about payment towards reimbursement components, the assessees have deducted tax at source: (vi) It is only in cases where separate bills were raised by the C&F agents reimbursement and the freight charges, backed by proper evidence that the assessees have not deducted any tax at source before making payments towards such reimbursement. Thus, the assessees only contend that in clear cases where separate hills have been raised by the C&F agents towards the reimbursement of freight charges, they are not liable to deduct tas at source upon payment towards such reimbursement components, since, such payment has no income element embedded in it. The assesses contention deserves to be upheld in the facts and circumstances of the present case Director of IT (International Tatution) vs Krupp Udhe GmbH (2010) 38 DTR (B) 251 (2013) 354 ITR 173 (Bom) followed Transmission Corporation of AP. Lad & Ors. 13. CIT (1999) 155 CTR (SC) 489: (1999) 239 ITR 587 (SC) relied on (Paras 17 & 18) The assessees contention that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsement of expenses incurred by RWPL and thereby confirming the levy of tax and interest u/s 201(1A) of the Act for all years i.e. for A.Ys. 2011-12 to 2017-18. Taking into facts and circumstances of the case and the submissions made before us the issue is only that whether the TDS is to be deducted on pure reimbursement of expenditure incurred. Perusing the record placed before us and the entire order of the ld. CIT(A) wherein findings are recorded that there is no material placed on record. But we observed that during the hearing from the record that the ld. CIT(A) has wrongly held that no material is placed. But before us the ld. AR for the assessee has produced all the evidences in paper book at page no. 1 to 157 which has also been produced before the ld. CIT(A) also, We note and after perusing all the records, regarding the issue of salary and other expenses, we see from paper books at page 112 to 123 the persons who were deployed with company, where the exact salary was reimbursed and we see debit note by the RPWL company to the Barmer Lignite Mining Company Limited and debit note persons wise details has also been given by the assessee. Thus, it is evident that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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