2017 (6) TMI 1382

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....AY) 2012-13 vide order dated 23/03/2014. 2. The dispute in the present case involves the applicability or otherwise in law and in the facts and circumstances of the case of s. 40(a)(ia) of the Act. The assessee, a dealer of Yamaha Motor Company Ltd., distributing mechanized fishing equipments, made payments to related firms, namely, Pandian Builders, George Maijo and George Maijo & Co. (Vizag), stated (by the ld. AR before us) to be partnership firms, against salary of their employees on deputation to the assessee-company. The payment/s is admittedly without deduction of tax at source. While the assessee claims it to be only a reimbursement of expenses, precluding deduction of tax at source, the Revenue contends the payments to have been m....

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....), approving the decisions by the Punjab & Haryana (PMS Diesels v. CIT [2015] 374 ITR 562); Gujarat (CIT v. Sikandarkhan N. Tunvar [2013] 357 ITR 312); Calcutta (CIT v. Crescent Exports Syndicate [2013] 262 CTR 525); and jurisdictional High Court (Tube Investments of India Ltd. v. Asst. CIT [2010] 325 ITR 610). On facts, the Revenue denied the claim on the basis that the expenditure has been merely routed through the books of its sister concerns, which were inoperational, so that their staff was surplus. If the employees had been rendered surplus due to lack of business or there being no business, which has not been taken-over by the assessee-company, at least during the relevant year, the area to probe or examine (by the Revenue) ought to....

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.... though surprisingly were not found reflected in the ledger accounts thereof. If, therefore, the debit notes reflect a contractual obligation for the services rendered by those concerns to the assessee, it would be a case of direct payment thereto, independent of the persons deployed by them or made available to the assessee-company. The applicability of TDS in such a case would depend on the nature of the payment and the work done (by the sister concerns). If, on the other hand, the debit notes state of only the employees having been deputed to the assessee-company, which may deploy them for any work it deems fit and proper for the purpose of its business, it would be a case of the employees being made available to the assessee-company. Th....