AI Drafter 
TaxTMI 
TaxTMI 
2022 (4) TMI 1490
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "1. The Officers below were not justified in treating the expenditure reimbursed as payment for service rendered warranting disallowance u/s. 40a(ia). 2. The Officer below have not considered the specific direction in I.T.A.T. order to consider the payment in the light of High Court decision in the case of CIT Vs Ansal Land Mark Township (P) Ltd. 377 ITR 635. 3. As long as the amount reimbursed has been included in the hands of the recipients the provisions of S-40(a)(ia) r.w.s. 201(IA) of I.T.Act would apply as the recipient have included this as part of their income. 4. Merely because the recipient firm did not have taxable income would not characterize such expenses reimbursed as regular receipt." 3. Brief ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of reimbursement of expenses and thus, question of deduction of TDS does not arise. The assessee further contended that employer of employees had deducted TDS u/s.192 of the Act, at the time of making payment to employees and thus, on reimbursement of said salary the assessee need not deduct TDS. The learned CIT(A), after considering relevant submissions of the assessee and also taken note of various facts, rejected arguments of the assessee and held that in the given facts & circumstances of the case, amount paid by the assessee to associate concerns cannot be treated as reimbursement of expenditure, because employees who are on deputation to the assessee were on the pay rolls of the associate concerns and further, sister concerns had pai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the credit of the Central Government. Further, associate concerns have accounted reimbursement amount paid by the assessee in books of account and offered for taxation for the assessment year 2012- 13. Therefore, in light of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Hindustan Coco cola Beverages P.Ltd.(supra), impugned payments cannot be disallowed u/s.40(a)(ia) of the Act. 6. The learned DR, on the other hand, supporting order of the learned CIT(A) submitted that first of all, payment made by the assessee to sister concerns is not in the nature of reimbursement of expenses. Further, the assessee has failed to file necessary evidence to prove that recipients have included sum paid by the assessee in their retu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... expenses is something, which the assessee needs to incur, but some third party has incurred expenditure on behalf of the assessee and later, the assessee had paid back amount to the third party. In this case, although, employees were on deputation to the assessee company, but they were remain in pay rolls of the associated enterprises and the associate enterprises continued to pay salary to the employees and thus, same cannot be considered as reimbursement of expenses. The learned CIT(A), after considering relevant facts has rightly held that amount paid by the assessee to associate enterprises is not in the nature of reimbursement of expenses, but payment made for rendering services. 8. Having said so, let us come back to the another l....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 635 and held that said amendment is curative in nature and therefore, applicable with retrospective effect from the date of insertion of provisions of section 40(a)(ia) of the Act. The Hon'ble Supreme Court in the case of CIT Vs. Hindustan Coco Cola Beverages Pvt.Ltd. (supra) had considered an identical issue and held that if the assessee files necessary evidence to prove that recipients have accounted sum paid without deduction of tax in their return of income and offered for tax, then same cannot be disallowed u/s.40(a)(ia) of the Act. In this case, the assessee has furnished necessary certificate from the associate enterprises and argued that sum paid by the assessee to associate enterprises is accounted in their books of account an....