Siva Business Management Services P Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1049/CHNY/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7433 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 28-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR CIT
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Transfer pricing; TDS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , .. , BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU R.L.REDDY, JUDICIAL MEMBER ./ ITA NO.1049/CHNY/2017 /ASSESSMENT YEAR: 2012-13 M/S.SIVA BUSINESS MANAGEMENT- SERVICES PVT. LTD., C/O. M/S.SUBBARAYA AIYAR PADMANABHAN & RAMAMANI, ADVOCATES, NEW NO.75 (OLD NO.105), DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI-4. VS. THE ASST. COMMISSIONER- OF INCOME TAX (OSD), CORPORATE CIRCLE-6, CHENNAI. [PAN: AADCC 7257 M ] ( # /APPELLANT) ( $%# /RESPONDENT) # & / APPELLANT BY : MR. R.VIJAYARAGHAVAN, ADV. $%# & /RESPONDENT BY : MR. R.CLEMENT RAMESH- KUMAR, ADDL.CIT & /DATE OF HEARING : 17.07.2019 & /DATE OF PRONOUNCEMENT : 23.07.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNA I, IN ITA NO.137/CIT(A)-15/2015-16/AY 2012-13 DATED 24.01.201 7 FOR THE AY 2012-13. ITA NO.1049/CHNY/2017 :- 2 -: 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) IS CONTRARY TO LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRMING THE DISALLOWANCE OF SHARE OF RENT FOR USE OF PREMISES A MOUNTING TO RS.64,20,606/-. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONCLUDING THAT THE ASSESSEE HAS NO BUSINESS ACTIVITY CARRIED OUT IN MU MBAI WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAD EMPLOYEES AND HAD RAISED INVOICES AND WAS RUNNING THE BUSINESS FROM THE PREMISES AT MUMBAI AND HENCE RENT PAYABLE WAS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRMING THE DISALLOWANCE OF RS.1,83,591/- ON THE GROUND THAT NO TAX WAS DEDUCTED AT SOURCE. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT A SUM OF RS.1,83,591/- WAS MERELY REIMBURSEMENT OF EXPENDITURE INCURRED AND HENCE NO TAX IS REQUIRED TO BE DEDUCTED FROM SUCH R EIMBURSEMENT. 6. THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONA L GROUNDS AT THE TIME OF HEARING. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF PROVIDING SUPPORTING SERVICES TO ITS ASSOCIATED ENTERPRISE COMPANY IN INDIA. THE RETURN OF INCOME FOR THE AY 2012-13 WAS FILED ON 30.11.2012 DECLARING TOTAL INCOME OF R S.86,93,240/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPL ETED BY THE AO VIDE AN ORDER DATED 31.03.2015 AT TOTAL INCOME OF RS.1,5 2,97,440/-. WHILE DOING SO, THE AO HAD DISALLOWED THE CLAIM FOR REIMB URSEMENT OF EXPENSES OF RS.64,20,606/- ON THE GROUND THAT THE ASSESSEE H AD NOT DEDUCTED TAX AT SOURCE U/S.194I OF THE ACT AND THAT THE ASSESSEE HAD NOT CARRIED OUT ANY BUSINESS IN THE SAID PREMISES IN RESPECT OF WHI CH THE RENT STATED TO HAVE BEEN PAID. ITA NO.1049/CHNY/2017 :- 3 -: BEING AGGRIEVED, THE APPEAL WAS FILED BEFORE THE LD .CIT(A) WHO VIDE IMPUGNED ORDER DISMISSED THE ASSESSEES APPEAL. 4. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE U S IN THE PRESENT APPEAL. 5. THE LD.COUNSEL FOR THE ASSESSEE STATED THAT THE AS SESSEE HAD ACTUALLY CARRIED OUT THE BUSINESS OPERATIONS AT MUM BAI IN RESPECT OF WHICH RENT WAS PAID TO THE AE COMPANY, IN SUPPORT OF THIS HE ALSO FILED COPIES OF THE LICENSE OBTAINED UNDER BOMBAY SHOPS & ESTABLISH MENTS ACT, 1948. HE FURTHER SUBMITTED THAT THOUGH THE ASSESSEE HAD F AILED TO DEDUCT THE TDS IN TERMS OF THE 2 ND PROVISO TO SEC.40(IA), THE PAYEE HAD PAID THE TAX THEREON, THEREFORE NO DISALLOWANCE IS ALLOWED. ON THE OTHER HAND, THE LD.SR.DR SUBMITTED THAT THE MATTER BE REMITTED BACK TO THE FILE OF THE AO FOR FRESH VERIFICATION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. 7. THE AO DISALLOWED THE CLAIM FOR REIMBURSEMENT OF R ENT EXPENSES OF RS.64,20,606/- FOR TWO REASONS THAT NO TDS ON THE S AID PAYMENT WAS MADE BY THE ASSESSEE AND THERE WAS NO EVIDENCE TO S HOW THAT THE ASSESSEE USED THE PREMISES FOR ITS BUSINESS PURPOSE . IT IS THE CLAIM OF THE ASSESSEE THAT THE REIMBURSEMENT OF EXPENSES TO M/S. SIVA VENTURES LTD. THE EXPENSES ARE INCURRED TOWARDS MAINTENANCE OF OF FICE VIZ., POSTAGE & COURIER, SECURITY CHARGES, STAFF WELFARE, PRINTING & STATIONERY ETC., AND ITA NO.1049/CHNY/2017 :- 4 -: MONTHLY RENT ARE APPORTIONED ON THE BASIS OF STRENG TH OF THE MANPOWER. IN SUPPORT OF THIS, THE ASSESSEE ALSO FILED A COPY OF LICENCE OBTAINED UNDER BOMBAY SHOPS & ESTABLISHMENTS ACT, 1948 FROM THE GO VERNMENT OF MAHARASHTRA. IN THESE CIRCUMSTANCES, THE SERVICES RENDERED BY M/S.SIVA VENTURES LTD., TO THE ASSESSEE ARE REQUIRED TO BE E XAMINED WITH REFERENCE TO THE EVIDENCE. THEREFORE, THE MATTER REQUIRES RE MISSION TO THE AO FOR EXAMINING THE EVIDENCE OF HAVING RECEIVED ANY SERVI CES FROM M/S.SIVA VENTURES LTD., AND ALSO VERIFY WHETHER THE ASSESSEE HAD PAID TAXES ON THE NIL INCOME. THE GROUND RELATING TO THE DISALLOWA NCE OF PROFESSIONAL CHARGES OF RS.1,83,591/- IS DISMISSED AS NOT PRESSE D DURING THE COURSE OF THE HEARING OF THE APPEAL. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 23 RD DAY OF JULY, 2019 IN CHENNAI. SD/- SD/- ( / 0 . . 3 ) ( DUVVURU R.L.REDDY ) 5 /JUDICIAL MEMBER ( ) ( INTURI RAMA RAO ) 5 /ACCOUNTANT MEMBER /CHENNAI, 6 /DATED: 23 RD JULY, 2019. TLN & $78 98 /COPY TO: 1. # /APPELLANT 4. : /CIT 2. $%# /RESPONDENT 5. 8 $ /DR 3. : ( ) /CIT(A) 6. /GF