TaxTMI 
TaxTMI 
2010 (5) TMI 841
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....s common order for the sake of convenience. 2. For the sake of brevity the brief facts of the case extracted from ITA No.4252/Mum/2009 in M/s. J.B. Boda Surveyors Pvt. Ltd. for the Assessment Year 2006-07 are that the assessee company is engaged in the business of Marine Cargo Surveyors, Samplers, Analysts and Loss Assessors. The return was filed declaring total income at Rs. 2,78,71,388/-. During the course of assessment it was observed by the Assessing Officer that the assessee has claimed reimbursement expenses Rs. 12,92,46,536/- under the head Management/Administrative expenses to M/s. J.B. Boda & Co. Pvt. Ltd. Since the assessee has not deducted TDS, the assessee was asked to explain as to why the said reimbursement expenses may not b....
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....n facilities and then recovers it from the respective participants on actual basis as far as possible. It was further submitted that M/s. J.B. Boda & Co. Pvt. Ltd. which is actually making the payments for the expenditure has been deducting tax at source and hence, complies with the provisions of deducting tax at source. It was further submitted that if the deduction is made by the assessee then it would amount to double deduction. The reliance was also placed on (i) ACIT vs. Modicon Networks P. Ltd. 14 SOT 204 (Del.); (ii) DECTA, In re 237 ITR 190 (AAR) and (iii) SEDCO Forex International Drilling Inc. vs. DCIT 72 ITD 204(Del.). The ld. CIT(A) while observing that the expenses reimbursed by the group company to the flagship company does no....
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....of the said order of the Tribunal. She therefore, submits that the order passed by the ld. CIT(A) be upheld. 6. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as the payment was made to parent company M/s. J.B. Boda & Co. Pvt. Ltd. as payment of reimbursement expenses on the basis of cost sharing arrangement. This arrangement was entered into for more effective cost management. The common expenses are incurred for and on behalf of everyone in the group. All the group companies reimbursed the expenses to M/s. J.B. Boda & Co. Pvt. Ltd. on an equitable basis determined in earlier years by the management consultant. There is no m....
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....were not made against any contract work carried out. It is an admitted fact in the case consideration that the payment made to parent company, M/s. J.B. Boda & Co. Pvt. Ltd. is a payment of reimbursement of expenses. In case of reimbursement of expenses, the expenditure incurred is related to the person who was not made the original payment. In other words, the payment of expenditure is made by X-party on behalf of the Y-party and later on the same is reimbursed to the X-party, by Y-party, the expenditure is pertaining to Y-party and not pertaining to X-party. Thus, the payment to M/s. J.B. Boda & Co. made by the assessee is a simple reimbursement. In the case under consideration, the parent company M/s.J.B. Boda & Co. Pvt. Ltd. has acted m....