TaxTMI 
TaxTMI 
2013 (2) TMI 259
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....nd marketing of CNG, Auto LPG, Natural Gas and any other gaseous fuel in the state of Andhra Pradesh. Bhagyanagar Gas Ltd. (JVC) was incorporated on 22nd August, 2003. It came into existence as a result of strategic business decision to have an entity with Geography Specific Focus to develop gas distribution network. GAIL & HPCL both agreed to contribute capital and certain other resources to functioning of the assessee company. 4. During the course of assessment proceedings, the Assessing Officer had noticed that the assessee paid GAIL and HPCL Rs. 1,30,67,866/- towards reimbursement of the cost of salaries of the employees with HPCL & GAIL who were on deputation to the assessee company and the assessee had not deducted tax from the payment made to the two concerns. The Assessing Officer held that the reimbursement of expenses debited to P&L account represented payment by the assessee to HPCL & GAIL for supply of labour to carry out the work of the assessee company. He noted that this is not a case where there is an employee and employer relationship to attract the provisions of section 192 for the purpose of TDS and this is purely a case where the manpower has been hired for H....
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....condment/deputation on request of JVC and enter into the gas purchasing agreement with HVC etc. In short the two companies have undertaken to provide all necessary assistance to the assessee-JV Company. 9. Under Article 14 GAIL and HPCL had agreed to bear the cost of incorporation as well as expenses relating to the business activity except man power cost, administration cost of the employees. However after incorporation of the JVC, all such expenses shall be reimbursed by JVC to the parties with interest. From the above, it can be seen that GAIL and HPCL had agreed to support the assessee in carrying on its business. 10. As part of this agreement GAIL and HPCL deputed their personnel to work for the JVC. Employees so deputed worked for the JVC. The JVC is liable to pay salaries to the deputed personnel. However for administrative convenience, GAIL and HPCL had paid the salaries to the deputed employees and the Assessee reimbursed the amount paid by GAIL and HPCL. 11. GAIL and HPCL deputed their personnel who worked under the control and management of JVC. The employees were carrying out the work of the Assessee as its employees not carrying out the work on behalf of GAIL ....
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.... 15. Briefly the facts of the case are that the assessee company filed its return of income for the AY 2008-09 on 24/09/2008 admitting a loss of Rs. 2,61,046/-. During the course of regular assessment proceedings, the Assessing Officer noticed that the company debited an amount of Rs. 1,01,72,133/- towards the reimbursement of the cost of salaries of employees of HPCL and GAIL who are on deputation to the assessee company, the details of which are as under:- (i) HPCL Rs. 56,39,153 (ii) GAIL Rs. 45,32,980 Rs. 1,01,72,133 The Assessing Officer, therefore, disallowed the said sum of Rs. 1,01,72,133/- being amount reimbursed by the assessee to GAIL and HPCL towards cost of salaries of their personnel sent on deputation to the assessee company. 16. On appeal, the CIT(A) held that the assessee is liable to deduct tax at source u/s 194C on the amounts reimbursed by the assessee to GAIL and HPCL of the Act, towards salaries of employees of GAIL and HPCL sent on deputation to the assessee company. 17. The assessee preferred appeal before us. 18. We have heard the arguments of the parties, perused the recor....
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.... capital in nature, the same is eligible for amortization under Sec.35D of the IT Act on the ground that the impugned amount is eligible for being treated as expenditure towards feasibility study and 1/5th thereof is eligible for amortization. The assessee pleaded that since the CNG business of the assessee commenced commercial operations in the month of August, 2005 (F.Y 2005-06) 1/5th of the expenditure is allowable in Asst. Year 2008-09 being the third year. 23. The A.O turned down this alternative plea also stating that the expenditure is not covered under Sec.35D. In his order, he did not state the basis for such a view. 24. While disallowing the expenditure of Rs.59,38,916/-, the A.O assigned a further reason viz., that even if the expenditure were revenue in nature, it is liable for disallowance u/s.40(a)(ia) of the I.T Act because the assessee did not deduct tax at source from these payments. 25. Before the C.I.T(A), the assessee submitted that on the facts of the case and the law relied upon by the assessee, the expenditure incurred on salaries of employees ought to have been allowed by the Assessing Officer. The assessee also relied on the decision of the Gauhati....