TaxTMI 
TaxTMI 
2019 (12) TMI 1208
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....39 arising out of amalgamation of Flextronics Software Limited (Flextronics) and Futures Software Limited (FSL) into the appellant on the ground that appellant has not assigned fair value to other assets while computing Goodwill. 2.1 That the Ld. AO/ DRP erred on facts and in law in not appreciating that the Goodwill represents difference between the aggregate book value of investment in the equity shares of Flextronics in the books of the appellant and FSL in the books of Flextronics and the aggregate face value of share capital of Flextronics held by the appellant and FSL held by Flextronics accounted as goodwill amounting to Rs. 26,75,57,10,570/- pursuant to amalgamation of Flextronics and FSL with the appellant. 2.2 That the Ld. AO/ DRP erred on facts and in law in alleging that the valuation of goodwill is unclear and the assessee had failed to ascribe a correct value to goodwill, i.e. the fair value of net assets. 2.3 That the Hon'ble DRP/ Ld. AO erred on facts and in law in relying on the ITAT Ruling of DCIT vs. Toyo Engineering Ltd., ITA No. 3279/ Mum/2008 without appreciating that the same was reversed by the Hon'ble Mumbai Bench of the Tribunal.....
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....82, claimed by the appellant in its return of income. 6. That the Ld. AO erred on facts in allowing credit of the tax deducted at source of Rs. 16,57,18,029, as against Rs. 18,79,68,945 claimed by the appellant in its return of income, resulting in short TDS credit amounting to Rs. 2,22,50,916. 7. That the Ld. AO erred on facts in allowing credit of the self-assessment tax of Rs. 21,54,42,020, as against Rs. 23,08,43,470 claimed by the appellant in its return of income, resulting in short credit of self-assessment tax of Rs. 1,54,01,450. 8. That the Ld. AO erred on facts and in law in charging interest of Rs. 84,89,450 under section 234A of the Act without appreciating that the appellant had duly filed its return before the due date of filing the return of income under section 139 of the Act. 9. That the Ld. AO erred on facts and in law in charging interest under sections 234B and 234C of the Act" 3. The Ld.AR for the assessee at the outset pointed out that the issues raised in the present appeal are similar to the issues raised in the earlier years and are squarely covered by the order of the Tribunal in earlier years. 4. The Ld. DR for th....
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....ointed out that the said amount was paid towards ESOP, on which no tax was deducted. The Assessing Officer show-caused the assessee to explain why the deduction on account of salary may not be disallowed, since it was not an allowable expenditure. The explanation of the assessee in this regard was as under:- I. "ESOP expense represents revenue cost paid by the assessee to its parent company in relation to the award of shares to its employees. Employees covered under the Restricted Stock Units and stock options have been granted the award, which entitles them to receive shares of Aricents (the ultimate holding company of assessee company) after completion of the vesting period. II. It is a mere reimbursement which the assessee compensated the parent company for granting the stock options or RSU to the assessee's employees. III. It is an alternative to direct incentive in cash to the employees and is intended for achieving increased level of participation and retention. IV. It is an expenditure incurred to compensate employees in lieu of services rendered. V. It is a perquisite. VI. It is a deductible business expenditure....
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....tions to the assessee's employees. Share incentive plan for the employees of Aricent Group was floated and under the scheme, as part of the employee compensation measure, an option to purchase the shares after the completion of the vesting period was granted to the employees of the company at a discounted price to the fair market value of the share. The difference between the fair market value of the shares and the amount paid by the employee on actual exercise of option represented employee compensation expenses. Since the option was granted to the employees during the relevant assessment year and assessee reimbursed the said amount to the group company, as the liability had accrued/crystallized and the same was recognized in the year itself as the assessee was following mercantile system of accounting. The aforesaid expense was claimed as deduction u/s 37(1) of the Act. It may be pointed out herein itself that the aforesaid payment to the Aricent Cayman has been accepted by the TPO to be at arms length. 113. We hold that the aforesaid payment under the ESOP scheme wherein the reimbursement was paid to the parent company, towards ESOP for granting stock options to assesse....
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.... in the case of ESOP and not prior to that. Hence, there was no requirement to deduct tax at source by the assessee while reimbursing the amount to its AE during the year under consideration. Accordingly, we direct the Assessing Officer to allow the said expense totaling to Rs. 6.58 crores. Ground of appeal Nos. 4 to 4.6 are thus allowed. 119. The issue raised in Ground of appeal No.5 by the assessee is against the transfer pricing adjustment of Rs. 3.90 crores on account of interest on receivables. The said issue is similar to Ground of appeal Nos. 4 to 4.6 of Assessment Year 201-111. Following the same parity of reasoning, we delete the transfer pricing adjustment and allow the claim of the assessee. Ground of appeal No.5 raised by the assessee in this appeal is thus allowed. 120. The issue raised in Ground of appeal No.6 is against incorrectly allowing credit of TDS. The Assessing Officer is directed to verify the claim of the assessee after allowing reasonable opportunity of hearing to assessee. Hence, Ground of appeal No.6 raised by the assessee is allowed." 8. Relying on the same parity of reasoning, we allow the claim of the assessee in Assessme....
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....ties and tax deducted at source and TDS claimed of Rs. 18.79 crores were furnished alongwith the return of income. The details of TDS are placed at pages 33 to 37 of the Paper Book. The first plea raised by the Ld.AR in this regard that where the TDS claimed by the assessee, was already reflected in the records of Tax Department, the Assessing Officer be directed to give credit of TDS claimed by the assessee. It was further pointed out that if tax had been deducted at source in accordance with the provisions of the Act and the same had been paid to the credit of Central Government, then as per section 199(1) of the Act, the same is to be treated as payment of tax on behalf of the person from whose income, such deduction was made. Further, in terms of section 205 of the Act, the assessee could not be held liable for payment of tax which was deducted at source by the deductor. In other words, once the tax has been deducted at source by the deductor, the tax could not be collected from the deductee and it was immaterial whether the deductor had deposited the tax so deducted to the credit of Central government or not. It was further stressed that since elaborate provisions are enshr....
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....section 199(1) of the Act, it is provided that if tax has been deducted at source in accordance with the provisions of the Chapter XVII and paid to the Central Government, the same shall be treated as payment of tax on behalf of the person, from whose income, the deduction was made. 19. Further section 205 of the Act reads as under:- 205. Where tax is deductible at the source under [the foregoing provisions of this Chapter], the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income." 20. Under section 205 of the Act, it is further provided that where the tax had been deducted at source by the deductor out of payments due to the deductee, then such deductee cannot be held liable for payment of such tax which was deducted at source by the deductor. In other words, under the provisions of the Act, it is provided that there is liability upon the person making the payments, to deduct tax at source in line with the provisions of Chapter XVII of the Act. Once such tax had been deducted then the deductor is liable to deposit the same into the credit of the Central Government. Such amount which is withheld by th....
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....see". The section provides that where tax is deducted at the source under the provisions of Chapter XVII, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income. This provision came up for consideration before division bench of this Court in case of Yashpal Sahni Vs. Rekha Hajarnavis and ors. It was a case where the employer while paying salary to the employee had deducted tax at source Rs. 6.66 lakhs. Subsequently, disputes arose between the employer and employee due to which service of the employee was terminated. The employee filed the return of income claiming credit of TDS of Rs. 6.66 lakhs. The Assessing Officer issued intimation under Section 143(1)(a) of the Act denying credit of TDS of Rs. 6.66 lakhs on the ground that such amount was not deposited by the employer. This Court in such background after referring to Section 205 of the Act held and observed as under:" 20. From the language of Section 205, it is clear that once the tax is deducted at source, the same cannot be levied once again on the assessee who has suffered the deduction. Once it is established that the tax has been deducted at sour....
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....ce by the employer company, then, the person from whose income, the tax has been deducted at source shall not be called to pay the said tax again. From the language of Section of 205 of the Act, it is clear that the bar operates as soon as it is established that the tax has been deducted at source and it is wholly irrelevant as to whether the tax deducted at source is paid to the credit of Central Government or not and whether TDS certificate in Form No. 16 has been issued or not. Also the mere fact that the employer may not issue TDS certificate to the employee does not mean that the liability of the employer ceases. The liability to pay income tax if deducted at source is upon the employer. 23. As held by the Gauhati High Court in the course of Omprakash Gattani (supra), once the mode of collecting tax by deduction at source is adopted, that mode alone is to be adopted for recovery of tax deducted at source. Although it is obligatory on the part of the person collecting tax at source to pay the said TDS amount to the credit of the Central Government within the stipulated time, if such person fails to pay the TDS amount within the stipulated time, then, Section 201 of the....