TaxTMI 
TaxTMI 
2013 (2) TMI 14
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....ical reporting of ships etc. It had filed its Return of Income declaring Nil income. However, book profit as per the provisions of section 115JB had been declared at Rs.2,02,228/-. The assessment was completed at a total income of Rs. 1,17,68,621/- detailed as under: - "Payment to Mercator Lines Limited is reimbursement of expenses incurred by them on behalf of the assessee company, and there was no contractual relationship to provide any service by the Mercator Line Limited to the assessee company. The later company has paid salary and has incurred other expenses on behalf of the assessee company. Mercator Lines Limited has not carried out any 'contract for work for the assessee company. It has not provided any servic....
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....21/- had been debited on account of shift management related expenses reimbursed. The assessee explained that the company M/s Mercator Lines Limited, Mumbia had made payments of salary and other expenses on behalf of assessee company. However, from the documents submitted during the course of assessment proceedings, the AO noticed that no TDS had been deducted by the assessee company for the payments made to M/s Mercator Lines Limited, Mumbai. The assessee explained that the payment to Mercator Lines Limited was merely reimbursement of expenses incurred by them on behalf of the assessee company, and there was no contractual relationship to provide any service by the Mercator Lines Limited to the assessee company. M/s Mercator Lines Limited ....
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....he above facts and following the ratio decidende of the Hon'ble Courts (supra), it is held that firstly, the provisions of section 194C read with sec. 40(a)(ia) of the Act are not applicable to the case of the appellant. Secondly, nature of expenses incurred by the assessee do not form part of expenses disallowable u/s 40(a)(ia) of the Act. Thirdly, when such type of expenses incurred by the appellant were totally paid and not remained payable as at the end of the relevant accounting period, provisions of section 40(a)(ia) of the Act are not applicable. Further, the appellant has clarified all the five questions raised as above and its clarifications are found satisfactory and convincing. Thus, no adverse inference could be drawn on the iss....
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....penses. The default in deduction of TDS would result in disallowance of expenditure on which such TDS was deductible." 8. In the result, this ground is dismissed. 9. Brief facts, apropos ground no. 2 are that the AO noticed that in the profit and loss account the assessee had shown technical books written off at Rs. 17,58,976/-. He noticed the following details from the depreciation chart : - Gross Block on Technical Books Rs. 20,05,236/- Depreciation as per Companies Act for A.Y. 2008-09 Rs. 2,46,260/- Remaining Gross Block as on 1/04/08 Rs. 17,58,976/- Depreciation claimed for AY 2009-10 Nil Technical Books Written Off Rs. 17,58,976/- 10. The AO further noticed that assessee had added back Rs. 17,58,....
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....ts all of its staff to its customer company, namely Mercator Lines Limited, who has taken over all of the staff and incurred their salary costs and other expenses on behalf of Vector Shipping Pvt. Ltd. and claimed reimbursement of the same from the assessee company." 12. From these replies, the AO concluded as under: - "It is hard to believe that why the company with investment of Rs. 20,05,236/- on Technical Books of such utmost importance would not transfer the same to its customer company or any other shipping company when such books are regularly used in such businesses. The question that, why such important books are retained by the company which has closed its business is not understandable? There is no weight....