2015 (9) TMI 1429

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....ces of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to delete the disallowance of deduction for reimbursement of expenses of Rs. 1,73,07,000/- to fellow subsidiary u/s 40(a)(ia) of the I.T. Act on the basis that no tax has been deducted at source u/s 194C. 2. The brief facts qua the aforesaid issue are that, the Assessing Officer noted that Goldman Sachs (India) Securities Finance Pvt Limited (GSIPL) had recharged an amount of Rs. 1,73,07,000/- to the assessee. In response to the show cause notice, the assessee submitted that such recharge of costs pertains to administrative costs like employee cost, rent, finance, legal, corporate recharge etc. which were recharged on the basis of times spent by the....

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....enditure in the nature of entertainment expenses, printing, courier charges, telecommunication expenses etc. 54. The Appellant and GSISPL had entered into a Cost Allocation & Recharge Agreement for this purpose. A copy of the Agreement was enclosed as Annexure 55. The Appellant made the payments to GSISPL without deduction of tax at source, since, the payments were in the nature of reimbursements costs incurred by GSISPL and there was no income element for GSISPL. However, the learned AO disallowed the deduction for the said expenses to the Appellant under section 40(a)(ia) of the Act, on the basis that the Appellant ought to have withheld tax under section 194C of the Act. 56. In this regard, we have in the follo....

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....decisions, which has been discussed by the CIT(A) in detail. It was further submitted that GSIPL had already deducted tax-at-source in accordance with the Chapter-XVII while making the payment to the third parties/employees, wherever applicable, hence original payment has already suffered tax. Ld. CIT(A), relying upon various decisions of the Tribunal upheld the contention of the assessee and held that no disallowance can be made u/s 40(a)(ia) as the assessee was not liable to deduct any TDS on reimbursement of any expenses. 4. Before us, Ld. DR strongly relied upon the order of the Assessing Officer, whereas the Ld. Senior Counsel, Shri J D Mistry apart from referring the following decisions which have been referred and relied upon by t....