TaxTMI 
TaxTMI 
2021 (2) TMI 547
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....ds of appeal filed by the Revenue read as under : 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the payment of Cross Charge by the assessee to Pfizer Ltd. was in the nature of reimbursement of expenses, whereas as per the cost sharing agreement, the payment was on estimate basis which cannot be regarded as reimbursement of quantifiable expenses? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the second proviso to section 40a(ia) inserted by Finance Act, 2012, shall be operative retrospectively and therefore the assessee shall not be treated as an assessee in default? 3. The appellant prays that ....
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....(ia) of the Act. 4. In appeal, the Ld. CIT(A) observed that similar issue arose before the Tribunal in assessee's own case for AY 2009-10. Facts being identical, he followed the said order of the Tribunal and deleted the disallowance of Rs. 15,37,60,992/- made by the AO. 5. Before us, the Ld. Departmental Representative (DR) relies on the order of the AO. On the other hand, the Ld. counsel for the assessee relies on the order of the Tribunal in assessee's own case for AY 2008-09 (ITA No. 6486/Mum/2012) and AY 2009-10 (ITA No. 1535/Mum/2015) and supports the order passed by the Ld. CIT(A). 6. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. We find th....
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....008 are purely in the nature of reimbursement of expenses incurred by Pfizer Limited ['Pfizer'] on behalf of Pfizer Products; b) The said expenses are recovered on cost-to-cost basis without any mark-up; c) Pfizer has already deducted tax at appropriate rate on payments made to the vendors/employees wherever applicable in accordance with provisions of the Income-tax Act, 1961, and d) Pfizer has not claimed any deduction for the aforesaid expenses in the return of income filed for AY 2006-07. This certificate is issued on the request of Pfizer Products and we hereby certify that information provided herein above is true and correct to our knowledge and belief and no part of it is false and nothing ....
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....ch is under the heads 'staff cost', 'travelling', 'advertising & promotional expenses' and 'other miscellaneous expenses'. Thereafter, the CIT(A) has noted the nature of the expenses under each of the four heads. The cross charges have been incurred by the assessee in terms of a cost sharing agreement with M/s. Pfizer Ltd. In terms of the agreement with M/s. Pfizer Ltd., assessee was sharing services of certain employees and other facilities which belonged to M/s. Pfizer Ltd. The reimbursement of such expenses due or paid to M/s. Pfizer Ltd. amounts to Rs. 14,51,77,000/- and has been included under the aforesaid expenditure heads in the account books of the assessee. Detailed explanation has been filed by the assessee for each of the heads ....
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....the payer to deduct tax at source. In our considered opinion, having regard to the factsituation brought out by the CIT(A), which is not assailed, the ratio of the decision of the Mumbai Bench of the Tribunal in the case of Bayer Material Science Pvt. Ltd. (supra) as well as the reasoning approved by the Hon'ble Bombay High Court in the case of CIT vs. Siemens Aktiongesellschaft (supra) clearly supports the conclusion drawn by the CIT(A) that there was no default on the part of the assessee in not deducting tax at source on the impugned payments to M/s. Pfizer Ltd. In this view of the matter, we, therefore, find no reasons to interfere with the ultimate conclusion of the CIT(A) in setting-aside the disallowance made by the Assessing Off....
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....e aforesaid amendments were understood by the CIT(A) to be retrospective and applicable for the instant year also, following the ratio of the decision of the Rajkot Bench of the Tribunal in the case of Gujarat Pipavav Port Ltd. vs. DCIT, TDS, (2014) 149 ITD 0023 (Rajkot). For the said reasons also, he has set-aside the invoking of Sec. 40(a)(ia) of the Act to make the impugned disallowance. 21. Notably, in the Grounds of appeal raised before us, there is no challenge to the aforesaid conclusion of the CIT(A). Consequently, even if the Revenue was to succeed on other pleas, in the absence of any challenge to the aforesaid conclusion by the CIT(A), the disallowance made by the Assessing Officer would not survive. Be that as it may, i....