TaxTMI 
TaxTMI 
2018 (2) TMI 2035
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....AO and submitted the information and details sought from the assessee. On perusal of P&L account it was noticed that the assessee had debited an amount of Rs. 223.53 lakhs on account of secondment charges under the head professional cost. Accordingly, the assessee was asked to justify the claim. The assessee submitted that the said charges were incurred for secondment of seconded by GAIL and British Gas work in Mahanagar Gas Ltd. employees and there is no mark up in the payments made to them. However, the AO rejecting the contention of the assessee added back the said amount to the income of the assessee holding that the claim is disallowable u/s 40(a)(ia) of the Act. It was further noticed that the assessee company had been following mercantile system of accounting and the assessee had mentioned in the accounts which reads as under: "Compensation receivable from customers with respect to shortfall in minimum guaranteed off-take of gas and delayed payment charges are recognized on receipt basis in view of uncertainty of collection." 3. Accordingly, the AO asked the assessee to submit quantum implication for the assessment year under consideration. In response thereof th....
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.... Securities Ltd. (appeal no. 3111 of 2009). 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of Rs. 30 lacs made by AO on estimated basis on account of compensation from customers without appreciating the facts that the assessee is following mercantile system of accounting, and hence, the compensation receivable from the customers is required to be accounted on accrual basis. 3. On the facts and the circumstances of the case and in law, the CIT (A) has erred in partly holding the addition made by the AO by stating only the profit element embedded in the bogus purchases is to be taxed instead of whole transaction." 5. Before us, the Ld. departmental representative relying on assessment order passed by the AO submitted that since the assessee had not obtained the certificate for non deduction of TDS from the competent authority, the Ld. CIT(A) has wrongly allowed the secondment expenditure by relying on the decision of Bombay High Court in the case of CIT Vs. Kotak Securities Ltd. rendered in appeal no. 3111 of 2009. The Ld. DR further submitted that since the assessee has failed to provide the quantu....
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....on 194J was not applicable to the payment of transaction charges and accordingly during the period from 1995 to 2005 neither the assessee has deducted tax at source while crediting the transaction charges to the account of the stock exchange nor the Revenue has raised any objection or initiated any proceedings for not deducting the tax at source. In these circumstances, if both the parties for nearly a decade proceeded on the footing that section 194J is not attracted, then in the assessment year in question, no fault can be found with the assessee in not deducting the tax at source under section 194J of the Act and consequently, no action could be taken under section 40(a)(ia) of the Act. It is relevant to note that from the assessment year 2006-07 the assessee has been deducting tax at source while crediting the transaction charges to the account of the stock exchange though not as fees for technical services but as royalty. It is further relevant to note that it is not the case of the Revenue that on account of the failure on the part of the assessee to deduct tax at source, the Revenue has suffered presumably because, the stock exchange has discharged its tax liability for the ....
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....e and since the assessee was to reimburse the emoluments and it controlled the services of the employee, it was the assessee which for all practical purposes was not chargeable to tax. Though the person deputed by the US Co was a technical person, the consideration paid under the secondment agreement was not "fees for technical services" because the fact that the seconded employee was responsible and subservient to the payer (assessee) and was required to be also act as officer or authorized signatory or nominee of the assessee made it consistent with an agreement for providing technical services. In view of the above facts and circumstances, we dismiss this issue of revenues' appeal. Respectfully following the order of coordinate bench, we dismiss the ground no. 1 raised by the revenue." 8. We further notice that the coordinate Bench has decided this issue in favour of the assessee by following the order of the coordinate Bench passed in the assessee's own case for the A.Y. 2009-10. Since, the coordinate Bench has decided the identical issue in favour of the assessee in assessee's own case referred above, we respectfully following the decision of the coordinate Bench d....