TaxTMI 
TaxTMI 
2019 (1) TMI 1990
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.... case, the Ld.CIT(A) has erred in deleting the addition made by the A.O. amounting to Rs.1,45,99,745/- on account of disallowance of expenses u/s 40(a)(ia) of Income Tax Act, 1961. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 2. Brief facts of the case are as under: We are taking appeal for A.Y. 2010-11 first, as the issue involved in both AYs is same. Assessee filed its return of income declaring loss of Rs.3,17,32,199/-. Return was processed under section 143 (1) of the Income Tax Act, 1961 (the Act), and case was selected for scrutiny. Accordingly, notice under section 143 (2) of the Act, was issued on 24/08/11 to assessee followed by notice under section 142 (1) along with questionnaire. In response to statutory notices, representative of assessee appeared before Ld.AO and filed necessary details as called for. 2.1. Ld.AO observed that assessee is engaged in the business of investment consulting and strategic communication services. During the assessment proceedings Ld.AO observed that assessee claimed expenses of Rs.1,76,41,309/-on account of....
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....sury, local audit, global/ regional consolidation and reporting, etc. for APCO India. In addition, financial support services also include assistance in developing financial strategy for APCO group and providing guidance on various financial matters relating to APCO India (including establishing and documenting uniform finance policies and procedures, global transfer pricing policies, banking relationships etc.) to ensure alignment with global financial strategies. - Information Technology: These services involve management of data and IT network required by APCO India, undertaking data/ server back-up procedures, new joiner IT related induction, assistance in centralized procurement of software, desktop, server hardware built and related maintenance services as per APCO Group standards, management of IT relationships with 3rd party software and hardware providers, support in uninterrupted remote access to APCO systems, resolving e-mail issues and Microsoft Office issues, etc. - Human Resources support: These services involve development of various employee strategies/ policies to address large-scale organizational issues, such as succession planning, workforce planning, benefi....
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....and no income element is involved in the same. These payments have been made to the group entities towards professional, legal and corporate charges on cost to cost basis and there is no mark up involved. The appellant submitted that there is no income element embedded in the aforesaid reimbursement of expenses. The appellant has filed copy of Form 15CA & CB in the paper book filed on 12.10.2015 wherein the payments remitted to the group entities are reflected. It is also seen that the reimbursement made to overseas group entities has been made in the consolidated manner which is pertaining to the previous year as well as for the assessment year under consideration. The appellant has also filed reconciliation of the reimbursement made with the respective party ledger account filed in the paper book dated October 12, 2015. The same has been found to be in order. As discussed above, the appellant has filed tax residency certificate of APCO U.S., APCO U.K. The appellant has also filed certificate from APCO U.S., APCO U.K. stating that they do not constitute any permanent establishment in India as contemplated under Article 5 of Indo-U.S., Indo-U.K. DTAA u/s 9(1 )(i). The APCO Hongko....
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....SLC CC No. 175 of 2014). This court is also supported in its reasoning by the text of Section 194C (TDS for "work") and Section 194J (TDS of income from "professional services"- the latter expression defined expansively by Section 194J (3) Explanation (a)). Neither provision obliges the person making the payment to deduct anything from contractual payments such as those made for reimbursement of ITA 627/2012 & 507/2013 Page 11 expenses, other than what is defined as "income". The law thus obliges only amounts which fulfil the character of "income" to be subject to TDS in such cases; for other payments towards expenses, the deduction to those entitled (to be made by the payeee) the obligation to carry out TDS is upon the recipient or payee of the amounts. 21. The facts of this case are identical to those in Gujarat Narmada Valley (supra) and for the reasons stated above, this Court does not find any compelling ground to arrive at a different conclusion. Thus, the ITATs ruling in this regard is upheld." 22. Lionbridge Technologies (P.) Ltd. v. Income-tax Officer (International Taxation) (TDS), 4 Mumbai [ 2015 ] 61 taxmann.com 335 (Mumbai - Trib.) in the ITAT MUMBAI BENCH 'L&#....
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....n 195(2) and obtain permission for non-deduction of tax at source, it was not permissible for payer to contend that payment made to non- resident did not give rise to "income" taxable in India and that, therefore, there was no need to deduct any tax at source. 7. We have perused the submissions advanced by both sides in the light of the records placed before us. 8. The entire basis of Ld.Sr.DR 's contention is that, if assessee makes payments to non-residents without deducting tax at source, section 195(2), would plug the loophole, as, the said section requires payer to make declaration before Assessing Officer (TDS) of payments made to non-residents. In other words, according to Ld.Sr. DR, section 195(2) is a provision, by which payer is required to inform Department of remittance made to a non-resident. 8.1. In our opinion section 195(1) uses expression "sum chargeable under the provisions of the Act", and section 195 uses the word 'payer' and not the word "assessee", ' Payer' becomes assessee-in-default, only when he fails to fulfil statutory obligation under section 195(1). If payment does not contain any element of income, payer cannot be made liable. He cannot be d....