AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2012 (2) TMI 322
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....d No. 1 & 2 read as under:- "(1) The order of the CIT(A) is opposed to law and facts of the case. (2) On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in holding that provisions of section 40(a)(ia) were not applicable to payments of Rs. 12,29,860/- towards conversion charges and Rs. 3,60,000/- towards administrative charges which is contrary to the provisions of said section which includes "any work" on which there is a liability to deduct tax at source." 5. Brief facts of the above issue are that in the assessment order, the A.O. has noted that the assessee company is a group concern of Alves Group. M/s Goldwin Medicare Ltd. was taken over by Alves Group as a sick unit. Hence, the same is also a group concern. The assessee company has claimed that it had not entered into any sort of fixed/written agreement with the main manufacturing company, as the ownership and directors of both companies are common, an agreement would not serve any purpose. The assessee company is not having any manufacturing facilities and to get goods manufactured from M/s Goldwin Medicare Ltd., it is paying the conversion charges and administrative expenses to its ....
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....y were actual expenditure. Similarly, in this type of expenditure also there was no need to deduct TDS. 6. The ld. CIT(A) observed that the assessee has paid conversion charges and administrative expenses without any formal agreement with M/s Goldwin Medicare Ltd., hence, the provisions of section 194C are not applicable to the facts of the case. The assessee has reimbursed expenses like office expenses, printing and stationery, electricity bills, telephone bills and several other office overheads which do not attract TDS and accordingly held the A.O. was not justified in disallowing conversion charges and administrative expenses u/s 40(a)(ia) and hence deleted the addition made by the A.O. 7. At the time of hearing, the ld. D.R. submits that the facts clearly shows that the conversion charges and administrative expenses are nothing but contract charges which are covered by the provisions of section 40(a)(ia) and, therefore, the assessee is liable to deduct TDS and since the assessee has not deducted TDS, the ld. CIT(A) was not justified in holding TDS provisions are not applicable and in deleting the addition made by the A.O. 8. On the other hand, the ld. Counsel for the....
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....s reimbursed the expenses to its principal company. This is, therefore, purely on account of reimbursement of expenses where no profit element is involved. It is also seen that the supplies were made from abroad to the assessee and therefore, it is also not correct that these supplies are made within the country. On similar facts, in the case of Modicon Network (P) Ltd. D Bench of the Delhi Tribunal have held that on reimbursement of expenses as having an income element embedded therein so as to attract sec. 195. Accordingly, the issue was decided in favour of the assessee. The Tribunal has observed in that case that the assessee reimbursed to H.K. Company the amounts paid by it to consultancy. There was no income element in the imbursement made to the assessee to H.K. Company. Therefore, the assessee was required to deduct the tax at source u/s 195 from the amount reimbursed to H.K. Company. In the present case also the assessee remitted the amount to its principal company on account of reimbursement of expenses. The principal company has purchased the materials of its own for the purpose of the assessee and bill paid by the principal company was sent to the assessee com....
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.... of any details of payment of Rs. 3,60,000/- as administrative expenses to the group concern. However, he did not make any separate addition in this regard on the ground that the entire expenses have already been disallowed u/s 40(a)(ia). On appeal, the ld. CIT(A) while observing that none of the directors are holding any substantial interest in either of the companies and the A.O. has not given any comparative figure to show that the payments has been over and above the arm's length price, deleted the addition made by the A.O. 12. At the time of hearing, the ld. D.R. submits that the ld. CIT(A) has erred in deleting the disallowance on the ground that none of the directors are holding any substantial interest in either of the companies whereas even as per assessee's letter dated 27.11.07 reproduced at page No. 2 of the assessment order wherein it has been clearly mentioned that the ownership and directors of both the companies are common, therefore, the ld. CIT(A) was not justified in deleting the disallowance made by the A.O. and, therefore, the addition made by the A.O. be restored. 13. On the other hand, the learned counsel for the assessee submits that since this issue has n....
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....e I.T. Act." 16. Brief facts of the above issue are that the A.O. observed that the assessee has claimed bad debts of Rs. 1,18,753/- on account of 3M India Ltd. The assessee company is having regular business with the above said party. During the year, the assessee has sold goods worth Rs. 49,14,528/- to the above said party. Considering these facts, the assessee was asked to furnish the copy of debit notes received from the above party in support of the debts written off. In response, it was submitted by the assessee that as they had incurred expenses towards freight, development of artworks and printing proofs, supply of empty packing materials against goods damaged at their end and also against some supplies that were made for trials and product evaluation for which debit notes and bills were raised over a period of time. The said company has not paid the said expenses and being a large multinational from whom substantial business has been generated and on whom the assessee is dependent upon for it's survival, it has been decided not to pursue for this amount in the interest of our future business and therefore written off. However, the A.O. was of the opinion that the assessee....