TaxTMI 
TaxTMI 
2018 (3) TMI 1037
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....e Ld. CIT(A) erred in deleting the disallowance u/s.40(a)(ia) relying on ITAT's decision for A.Y.2008-09 and not on the fact of the case of the assessee" 2. Whether on the facts and in the circumstances of the case and in law, the decision of the ITAT in the case of the assessee for A.Y.2008-09, relying on the decision of the coordinate bench of the ITAT in the case of ACIT vs JB Boda Surveyors Pvt. Ltd. is distinguishable on facts, in as much as in the case of ACIT vs JB Boda Surveyors Pvt. Ltd there was a sharing of expenses between the leading company and the group companies operating from the same premises without a contractual agreement. whereas in the case of the assessee, there was a contractual agreement between the assessee company and the other group companies for reimbursement of expenses as a result of which the assessee was bound to deduct TDS u/s.194C of the Income Tax Act, 1961, therefore, the decision of the Ld. CIT(A) to rely on the order of the ITAT for A.Y.2008-09 is bad in law." 3. Briefly stated facts are that during the year under consideration, the assessee reimbursed the following expenses to the group entities: - "a) Monsanto Holdings P....
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....rival submissions in the light of material placed before us. We have carefully gone through the assessment order. The AO did not dispute the fact that the impugned amount was in the nature of reimbursement expenses on cost to cost basis. If it is so, according to the ratio of the decision rendered by Co-ordinate Bench in the case of ACIT Vs. J.B.Boda Surveyors Pvt. Ltd.(supra) , it has to be held that the disallowance cannot be made as it has not been shown or established that aforementioned payments were made by the assessee to the aforementioned group concerns against any contract work carried out by them for the assessee. In the case of reimbursement of expenses, the expenditure incurred is related to the person who has not made the original payment. The payment of expenditure is made by "X" party on behalf of "Y" party and later on the same is reimbursed to "X" party by "Y" party, the expenditure is pertaining to "Y" party and not pertaining to "X" party. Therefore, applying the ratio laid down in the case of ACIT vs. Crowe Boda & Co. Pvt. Ltd. in ITA No.4251/M/2009 vide order dated 30/3/2010, relied upon in the case of ACIT Vs. J.B. Boda Surveyors Pvt. Ltd., the issue is decid....
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....ew of the decision of Hon'ble Delhi High Court in the case of CIT v. Ansal Landmark Townships Pvt. Ltd [2015] 377 ITR 635 (Del).. Hon'ble Delhi High Court Held as under:- "11. The first proviso to Section 210 (1) of the Act has been inserted to benefit the Assessee. It also states that where a person fails to deduct tax at source on the sum paid to a resident or on the sum credited to the account of a resident such person shall not be deemed to be an assessee in default in respect of such tax if such resident has furnished his return of income under Section 139 of the Act. No doubt, there is a mandatory requirement under Section 201 to deduct tax at source under certain contingencies, but the intention of the legislature is not to treat the Assessee as a person in default subject to the fulfilment of the conditions as stipulated in the first proviso to Section 201(1). The insertion of the second proviso to Section 40(a) (ia) also requires to be viewed in the same manner. This again is a proviso intended to benefit the Assessee. The effect of the legal fiction created thereby is to treat the Assessee as a person not in default of deducting tax at source under certain contin....
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.... ensuring that an expenditure should not be allowed as deduction in the hands of an assessee in a situation in which income embedded in such expenditure has remained untaxed due to tax withholding lapses by the assessee. It is not, in our considered view, a penalty for tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in Section 271 C, and, section 40(a)(ia) does not add to the same. The provisions of Section 40(a)(ia), as they existed prior to insertion of second proviso thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee's tax withholding lapses did not result in any loss to the exchequer. Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so speci....