TaxTMI 
TaxTMI 
2016 (5) TMI 575
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.... its return of income on 30/09/2010 declaring total income of Rs. 7,42,23,711/-. The return was processed under section 143(1) of the Income Tax Act,1961( in short 'the Act') and the case was subsequently taken up for scrutiny. The assessment was completed under section143(3) r.w.s. 144C of the Act vide order dated 27/11/2013, wherein the income of the assessee was accepted as returned at Rs. 7,44,23,710/- under the normal provisions of the Act and 'Book Profits' under section 115JB of the Act was computed at Rs. 5,30,67,670/-. 2.2 The CIT -I, Mumbai, on a perusal of the records of assessment, observed that the assessee had incurred reimbursement of cost recharge expenses amounting to Rs. 3,17,37,719/-, on which tax was not deducted at source while making the said payments to Goldman Sachs(India) Securities Pvt. Ltd. (hereinafter referred to as 'GSISPL'). In this context the Ld. CIT issued a show cause notice dated 19/1/2015 to the assessee proposing to revise the order of assessment for assessment year 2010-11 on the aforesaid issue. It was contended therein that on verification of records for assessment year 2009-10, it was seen that the Assessing Officer had made disallowance u....
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....o so has rendered the order of assessment to be erroneous and prejudicial to the interest of Revenue. In that view of the matter, the Ld. CIT cancelled the order of assessment dated 27/11/2013 for assessment year 2010-11 and restored the matter to the Assessing Officer to look into whether in the reimbursement of expenses there is any income accrued to the recipient i.e. to M/s. Goldman Sachs (India) Securities Pvt. Ltd. and if TDS was liable to be deducted, the Assessing Officer shall make a fresh assessment invoking the provisions of section 40(a)(ia) of the Act. 3. Aggrieved by the order under section 263 of the Act dated 18/2/2015 for assessment year 2010-11 passed by the CIT-I, Mumbai, the assessee has preferred this appeal raising the following grounds:- "General ground: 1. erred in initiating and passing the order under section 263 of the Act disallowing the reimbursements paid to Goldman Sachs (India) Securities Private Limited (GSISPL) under section 40(a)(ia) of the Act on account of nondeduction of tax at source; 2. erred in concluding that a recurring reimbursement under a cost sharing agreement automatically suggests an income element associated with the paymen....
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....this regard the assessee also placed reliance on the following Judicial pronouncements in support of the proposition that no tax is required to be deducted at source when the payment is in the nature of reimbursement of expenses since there is no element of income embedded therein:- (i) J.B.Boda Surveyors Pvt. Ltd. (ITA No.4252/Mum/2009) (ii) Mahyco Monsanto Biotech (India) Ltd. (ITA No.5842/Mum/2012) (iii) CIT vs. Siemens Aktiongesellschaft (310 ITR 320)(Bom) (iv) Bayer Material Science Pvt. Ltd. (ITA No.7977/Mum/2010) 4.1.2 The Ld. Sr. Counsel contended that the facts as submitted above clearly establish that the order of assessment dated 27/11/2013 is not erroneous as the Assessing Officer had applied his mind on the matter by considering the submissions and details put forth by the assessee on this issue vide letters dated 9/1/2013 and 30/10/2013. The Assessing Officer's finding could have been regarded as erroneous only when the Assessing Officer had not considered the issue before him or not made any examination or enquiry on the issue or omitted consideration of the issue in question. This is, admittedly, not the case of the Ld. CIT. In these circumstances, it is conten....
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....uch reimbursement are mere recoupment of expenses and would not constitute income of the recipient. Hence, there is no liability cast upon the assessee to deduct tax at source on reimbursement of expenses and, therefore, disallowance under section 40(a)(ia) of the Act is not warranted. In support of the proposition that no tax is required to be deducted when payment is reimbursement of expenses, reliance was placed, inter-alia, on the decision of the Co-ordinate bench of this Tribunal in the assessee's own case for assessment year 2009-10 (ITA No.2518/Mum/2013). It was also submitted that in the case on hand, while the Assessing Officer had made disallowance of reimbursement of expenses under section40(a)(ia) of the Act on account of non-deduction of tax in assessment years 2009-10 and 2011-12, the Ld. CIT(A) had deleted these disallowances and the order of Ld. CIT(A) for assessment year 2009-10 was upheld by the Co-ordinate in ITA No.2518/Mum/2013 dated 4/9/2015 (supra). Therefore, the impugned order of the Ld. CIT under section 263 of the Act was also not sustainable on merits also. 4.3 Per contra, the Ld. Departmental Representative placed strong reliance on the decision of the....
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....ssessing Officer called for and examined the details field by the assessee on the aforesaid issue of reimbursement of expenses to 'GSISPL', means that the Assessing Officer has already taken a view in the matter; that is possibly sustainable in law, i.e. that no tax was required to be deducted at source on aforesaid reimbursement of expenses to 'GSISPL'. In coming to the view that no TDS is to be deducted when the payment is in the nature of re-imbursement of expenses since there is no income element is embedded therein, we draw support from the decision of the Coordinate bench of ITAT Mumbai in the case of J.P.Boda Surveyors (supra), Mahyco Monsanto Biotech (India) Ltd and Bayer Material Science Ltd. (supra). 4.4.2 In this factual and legal matrix of the case, as discussed above, where admittedly the details of the issue of reimbursement of expenses by way of payments by the assessee to 'GSISPL' were called for by the Assessing Officer, filed by the assessee and examined by the Assessing Officer in the course of assessment proceedings and a possible view, sustainable in law, is taken by him, the impugned revision order, in our view is nothing but a change of opinion by the Ld. CI....
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.... indeed look into. The entire details were filed and the order itself indicates that it can be inferred that the Assessing Officer not only made enquiries, but satisfied himself with the assessee's replies furnished from time to time in support of its stand. When the Tribunal concludes in this manner and finally in paragraph 16 holds that the Assessing Officer took a perfectly correct or a possible view, then, the order passed by him cannot be termed as erroneous insofar as it is prejudicial to the interest of the Revenue. The Commission of Income tax was not, therefore, justified in invoking section 263 of the Act. Taking into account the facts and circumstances of the case, as discussed above from para4.4.1 to 4.4.3 of this order, placing reliance inter-alia, on the various judicial pronouncements referred to (supra), we also draw support from the aforesaid decision of the Hon'ble Bombay High Court in the case of Reliance Communications Ltd. (supra) to hold that when the Assessing Officer examined the material called for and placed before him by the assessee, which fact is admitted by the Ld. CIT, and the Assessing Officer took a correct possible view in the matter, the order o....