2021 (6) TMI 456

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of Hire Charges Rs. 2,92,500/- The CIT(A) erred in law and on facts of the case by disallowing Hire Charges - others expenses of Rs. 2,92,500/- on account of nondeduction of TDS for purchase against payment of VAT under the right to Use and alleging that no invoices were provided to him. The appellant respectfully prays that the directions of the CIT(A) to the AO be quashed and AO be directed to allow the Hire charges of Rs. 2,92,500/-. GROUND - 2 Disallowance of External Services Rs. 52,11,040/- The CIT(A) also erred in law and on facts of the case by disallowing Payments made to Related Parties against reimbursement of expenses as liable for deduction of TDS. CIT(A) also erred in assuming that ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d and AO be directed to allow the expenses of Rs. 52,11,040/- GROUND - 5 Request for leave to add, alter, amend and/or supplement the grounds of appeal The appellant craves leave to add, alter, amend and / or supplement any ground or grounds if necessary, at the time of hearing of the appeal. 3. The brief facts of the case are that assessee company M/s. Herrenknecht AG is a foreign company incorporated in Germany, has established a place of business in Delhi to carry out Micro Tunnelling Works for Pratiba Industries Ltd. The assessee has filed its return of income for assessment year 2015-16 on 30.11.2015 declaring total income at Rs.Nil. The assessment for the impugned assessment year has been completed u/s.14....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ices for expenses however bills relating to total expenditure incurred were available with the assessee. 4.1 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. Admittedly, the assessee has filed sample bills for hire charges and this fact has been accepted by the AO. The AO after considering bill submitted by the assessee has accepted claim of hire charges and out of total expenses incurred for the year at Rs. 5,85,000/- has allowed deduction for an amount of Rs. 2,92,500/-. However, balance amount of Rs. 2,92,500/- was disallowed in absence of bills and vouchers. The assessee has filed a paper-book which contains copies of bills issued by M/s. Vardhman Diesel & Gene....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....asis and without any mark up or profit, these does not warrant deduction of tax at source on said payment. The AO has disallowed External service charges on the ground that the assessee company has not provided any evidence such as agreement / invoice to prove payment of expenses and further these expenses were actually expenses allocated by the Head office on projects in India. 5.1 The ld. AR for the assessee submitted that the ld.CIT(A) has erred in confirming disallowance made by the AO towards External service charges without appreciating the fact that said expenses are allocation of company expenses by the Head office to its Branch offices without any mark up or profit and thus same is not liable for TDS. The ld.AR further submitted....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ts to the effect that the assessee has failed to file necessary evidences including agreement between parties and bills & vouchers in support of its claim. Therefore, we are of considered view that the issue needs to go back to file of the AO to reconsider the issue that said payment is reimbursement of expenses to its Head office for allocation of common expenses to various Branch offices. In case, the assessee files necessary evidences to prove its claim, then the AO is permitted to cause necessary enquiries and take appropriate decision in accordance with law. 6. The next issue that came up for our consideration from Ground No.3 of assessee appeal is disallowance of payment made to related parties of Rs. 77,39,322/-. The facts with re....