2023 (1) TMI 866 - AT - Income Tax

Tribunal Upholds CIT(A) Decision on Income Tax Act Disallowances, Revenue Appeal Dismissed

DCIT, Circle : 20 (2), New Delhi. Versus M/s. RATP Dev Transdev India Pvt. Ltd. [Formerly known as M/s. Veolia Transport RATP India Pvt. Ltd.]

DCIT, Circle : 20 (2), New Delhi. Versus M/s. RATP Dev Transdev India Pvt. Ltd. [Formerly known as M/s. Veolia Transport RATP India Pvt. Ltd.] - TMI Issues Involved:1. Deletion of disallowance of Rs. 2,72,66,619/- made by the Assessing Officer under section 28 of the Income Tax Act, 1961, on account of difference between receipts as per Form 26AS and as per books of accounts.2. Deletion of disallowance of Rs. 63,57,485/- made by the Assessing Officer under section 40(a)(ia) of the Income Tax Act, 1961, on account of non-deduction of tax at source on amounts paid for expatriate employees.Issue-wise Detailed Analysis:1. Deletion of Disallowance under Section 28 of the Income Tax Act, 1961:The Revenue challenged the deletion of Rs. 2,72,66,619/- by the CIT(A), which was added by the Assessing Officer (A.O.) due to a discrepancy between the receipts as per Form 26AS and the books of accounts. The A.O. observed that the assessee failed to provide documentary evidence to reconcile this difference, despite several opportunities. The assessee contended that the discrepancy was due to amounts incorrectly reported by the deductor or ad-hoc settlements by customers. The CIT(A) accepted the assessee's reconciliation, which showed that over a span of five years, the income reported in the audited financials was cumulatively higher than that reported in Form 26AS, except for a residual difference of Rs. 61,09,616/-. The Tribunal upheld the CIT(A)'s decision, noting that the assessee's books of accounts were regularly audited and there were no specific defects or discrepancies identified by the A.O. Therefore, the deletion of the disallowance was justified, and Ground No. 1 of the Revenue was dismissed.2. Deletion of Disallowance under Section 40(a)(ia) of the Income Tax Act, 1961:The Revenue also contested the deletion of Rs. 63,57,485/- by the CIT(A), which was disallowed by the A.O. due to non-deduction of tax at source on amounts paid for expatriate employees. The CIT(A) relied on the decision in the assessee's own case for Assessment Year 2014-15, where it was held that social security contributions paid outside India did not constitute income from salary in the hands of expatriate employees, as they did not have any vested right over such contributions. The Tribunal agreed with this reasoning, citing the Delhi High Court judgment in Yoshio Kubo vs. CIT, which held that such contributions are not taxable as salary since they do not result in a direct present benefit to the employee. Consequently, the deletion of the disallowance by the CIT(A) was upheld, and Ground No. 2 of the Revenue was dismissed.Conclusion:The Tribunal dismissed the appeal filed by the Revenue, upholding the CIT(A)'s deletions of the disallowances under sections 28 and 40(a)(ia) of the Income Tax Act, 1961. The order was pronounced in the Open Court on 20th January 2023.