DCIT 1(2), MUMBAI V. MAHYCO MOSANTO BIOTECH (I) LTD, MUMBAI

ITA 1840/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84614 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 1840 /MUM/2013 ASSESSMENT YEAR: 2009-10 DCIT 1(2) R. NO. 535, 5 TH FLOOR, AAYAKAR BHAVAN M.K. ROAD MUMBAI VS. M/S. MAHYCO MOSANTO BIOTECH (I) LIMITED. 5 TH FLOOR, AHURA CENTRE, 96, MAHAKALI CAVES ROAD, ANDHERI (EAST) MUMBAI- 400 093 PAN:AACCP 2478 C (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI KIRIT KAM DAR REVENUE BY : SHRI S.J. SINGH DATE OF HEARING : 10 . 12 . 2014 DATE OF ORDER : 22 . 1 2 .2014 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN PREFERRED BY THE REV ENUE, AGAINST ORDER DATED 21.12.2012, PASSED BY THE LD.CIT(A)-2, MUMBAI, FOR THE QUANTUM OF THE ASSESSMENT PASSED U/S 143(3) FOR THE A.Y. 2009-10, ON THE FOLLOWING GROUNDS:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN ALW, THE LD.CIT(A) ERRED IN DELETING THE DISALLO WANCE U/S 40(A)(IA) RELYING ON THE ITATS DECISION FOR A.Y. 2 008-09 AND NOT ON THE FACT OF THE CASE OF THE ASSESSEE? 2. AT THE OUTSET THE LEARNED COUNSEL SUBMITTED THAT THE ISSUE RAISED IN THE GROUND OF APPEAL SQUARELY COVERED BY THE DEC ISION OF THE TRIBUNAL ITA NO. 1840 /MUM/2013 M/S. MAHYCO MOSANTO BIOTECH (I) LIMITED. ASSESSMENT YEAR: 2009-10 2 ASSESSEES OWN CASE FOR THE A.Y. 2008-09 PASSED IN ITA NO. 5842/MUM/2012 ORDER DATED 30.11.2012. LD. DR ALSO ADMITTED THAT THE ISSUE INVOLVED IS COVERED BY THE DECISION OF THE TR IBUNAL. 3. THE BRIEF FACTS ARE THAT, THE ASSESSE COMPANY IS A JOINT VENTURE BETWEEN MAHYCO SEEDS LTD. AND M/S. MOSANTO HOLDINGS PVT. LTD, EACH HOLDING 50% OF THE EQUITY SHARE CAPITAL. THE ASSESS E COMPANY IS ENGAGED IN PROMOTION, MARKETING AND SUB-LICENSING O F THE TRAIT TECHNOLOGY AND SUPPORTING THE SUB LICENSES THROUGH MARKET RESEARCH AND ADVERTISING, FOR WHICH THE APPELLANT RECEIVES R OYALTY AND TECHNICAL FEES FROM SUB LICENSES. DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ON TH E FOLLOWING PAYMENT/REIMBURSEMENT OF EXPENSES, THE ASSESSE HAS NOT DEDUCTED TDS AND THEREFORE, DISALLOWANCE U/S 40(A)(IA) IS CALLED FOR. I) REIMBURSEMENT OF EXPENSES TO GROUP COMPANIES AS PER PARA 3.1.1 RS.12,34,99,792 II) NON-DEDUCTION OF TDS FOR PAYMENTS UNDER HEAD ADVERTISING & PROMOTION AS PER PARA 3.1.2 RS. 2,21,99,066 III) NON DEDUCTION OF TDS ON CONSULTANCY & PROFESSIONAL FEES AS PER 3.1.3 RS. 68,062 THE ASSESSING OFFICER HELD THAT AND THE ASSESSE HAS MADE PAYMENT TO THE GROUP COMPANIES AS PER THE AGREEMENT IN THE REQ UIRED SERVICES, FOR WHICH THE ASSESSE WAS LIABLE TO DEDUCT TDS U/S 194C AND THEREFORE, NON DEDUCTION OF TDS LEADS TO DISALLOWANCE U/S 40(A)(IA ). ITA NO. 1840 /MUM/2013 M/S. MAHYCO MOSANTO BIOTECH (I) LIMITED. ASSESSMENT YEAR: 2009-10 3 4. BEFORE THE LD.CIT(A), DETAIL SUBMISSIONS WERE MA DE WHICH HAS BEEN DEALT BY THE LD.CIT(A) FROM PAGES 5 TO 13 OF T HE APPELLATE ORDER. THE LD.CIT(A) HELD THAT SIMILAR DISALLOWANCE WAS MA DE EARLIER WHICH HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2008- 09, THEREFORE, FOLLOWING THE SAME HE HELD THAT THE PROVISION OF TDS ARE NOT APPLICABLE TO THE REIMBURSEMENT OF EXPENSES MA DE BY THE ASSESSE TO ITS ASSOCIATE CONCERN. 5. AFTER CONSIDERING THE RELEVANT FACTS, WHICH ARE SIMILAR TO THE ASSESSMENT YEAR 2008-09, WE FIND THAT, THIS ISSUE H AS BEEN DECIDED BY THE TRIBUNAL IN THE FOLLOWING MANNER:- WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. WE HAVE CAREFULLY GONE T HROUGH THE ASSESSMENT ORDER. THE AO DID NOT DISPUTE THE FACT T HAT THE IMPUGNED AMOUNT WAS IN THE NATURE OF REIMBURSEMENT EXPENSES ON COST TO COST BASIS. IF IT IS SO, ACCORDING TO TH E RATIO OF THE DECISION RENDERED BY CO-ORDINATE, BENCH IN THE CASE OF ACIT VS. J.B.BODA SURVEYORS PVT. LTD.(SUPRA) , IT HAS TO BE HELD THAT THE DISALLOWANCE CANNOT BE MADE AS IT HAS NOT BEEN SHOW N OR ESTABLISHED THAT AFOREMENTIONED PAYMENTS WERE MADE BY THE ASSESSEE TO THE AFOREMENTIONED GROUP CONCERNS AGAIN ST ANY CONTRACT WORK CARRIED OUT BY THEM FOR ASSESSEE. IN THE CASE OF REIMBURSEMENT OF EXPENSES, THE EXPENDITURE INCURRED IS RELATED TO THE PERSON WHO HAS NOT MADE THE ORIGINAL PAYMENT . THE PAYMENT OF EXPENDITURE IS MADE BY 'X'' PARTY ON BEH ALF OF 'Y' PARTY AND LATER ON THE SAME IS REIMBURSED TO 'X' PA RTY BY 'Y' PARTY, THE EXPENDITURE IS PERTAINING TO 'Y' PARTY A ND NOT PERTAINING TO 'X' PARTY. THEREFORE, APPLYING THE RA TIO LAID DOWN IN THE CASE OF ACIT RELIED UPON IN THE CASE OF ACIT VS . BODA & CO. PVT. LTD. IN ITA NO.4251/M/2009 VIDE ORDER DATED 30 /3/2010, RELIED A UPON IN THE CASE OF ACIT VS. J.B.BODA SURV EYORS PVT. LTD., THE ISSUE IS DECIDED IN FAVOUR OF ASSESSEE. T HE RELEVANT OBSERVATIONS HAVE ALREADY BEEN REPRODUCED ABOVE. IN VIEW OF THE ABOVE DISCUSSION, GROUND NO.1 OF THE ASSESSEE IS AL LOWED. ITA NO. 1840 /MUM/2013 M/S. MAHYCO MOSANTO BIOTECH (I) LIMITED. ASSESSMENT YEAR: 2009-10 4 FOLLOWING THE EARLIER YEARS PRECEDENCE, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSE AND THE GROUND RAISED BY THE DEPARTMENT THUS, STANDS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF DECEMBER, 2014. SD/- SD/- (N.K. BILLAIYA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22.12.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.