GOLDMAN SACHS INDIA FINANCE P.LTD, MUMBAI V. CIT 1, MUMBAI

ITA 2227/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3793 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Assessee Lawyers: J D MISTRY
• Keywords: Depreciation; Non-deduction of tax; Difference of opinion; Change of opinion
• Section: 115JB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) GOLDMAN SACHS (INDIA) FINANCE PRIVATE LIMITED, 951 A, RATIONAL HOUSE, APPASAHEB MARATHE MARG, PRABHADEVI, MUMBAI 400 025. ... APPELLANT PAN: AAACP 2448J VS. THE COMMISSIONER OF INCOME TAX-1, ROOM NO.387, 3 RD FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400025 .... RESPONDENT APPELLANT BY : SHRI J.D.MISTRY RESPONDENT BY : SHRI SUBACH AN RAM DATE OF HEARING : 29/04/2015 DATE OF PRONOUNCEMENT : 11/05/2015 ORDER PER JASON P. BOAZ, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, 1961(IN SHORT T HE ACT) PASSED BY THE CIT -I, MUMBAI VIDE ORDER DATED 18/2/2015 FOR ASSESSMENT YEAR 2010-11. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) 2.1 THE ASSESSEE COMPANY IS A NON-BANKING FINANCE COMPANY ENGAGED IN STOCK BROKING, INVESTMENT BANKING, TRADI NG, INSURANCE AND SECURITIZATION OF LOANS, PASS THROUGH CERTIFICATES , PUBLIC SECTOR/CORPORATE BONDS, DEBENTURES, CERTIFICATES OF DEPOSITS AND GOVERNMENT OF INDIA SECURITIES. THE ASSESSEE COMPAN Y, FORMERLY KNOWN AS PRATHAM INVESTMENT AND TRADING PVT. LTD. WAS AC QUIRED 100% BY THE GOLDMAN SACHS GROUP AND AFFILIATES AND THE NAME WA S CHANGED TO ITS PRESENT ONE. FOR ASSESSMENT YEAR 2010-11, THE ASSE SSEE FILED ITS RETURN OF INCOME ON 30/09/2010 DECLARING TOTAL INCOME OF R S.7,42,23,711/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF TH E INCOME TAX ACT,1961( IN SHORT THE ACT) AND THE CASE WAS SUBS EQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTI ON143(3) R.W.S. 144C OF THE ACT VIDE ORDER DATED 27/11/2013, WHEREI N THE INCOME OF THE ASSESSEE WAS ACCEPTED AS RETURNED AT RS.7,44,23 ,710/- UNDER THE NORMAL PROVISIONS OF THE ACT AND BOOK PROFITS UND ER SECTION 115JB OF THE ACT WAS COMPUTED AT RS.5,30,67,670/-. 2.2 THE CIT I, MUMBAI, ON A PERUSAL OF THE RECORDS OF ASSESSMENT, OBSERVED THAT THE ASSESSEE HAD INCURRED REIMBURSEM ENT OF COST RECHARGE EXPENSES AMOUNTING TO RS.3,17,37,719/-, ON WHICH TAX WAS NOT DEDUCTED AT SOURCE WHILE MAKING THE SAID PAYMENTS T O GOLDMAN SACHS(INDIA) SECURITIES PVT. LTD. (HEREINAFTER REFE RRED TO AS GSISPL). IN THIS CONTEXT THE LD. CIT ISSUED A SHOW CAUSE NOTIC E DATED 19/1/2015 TO THE ASSESSEE PROPOSING TO REVISE THE ORDER OF ASSES SMENT FOR ASSESSMENT YEAR 2010-11 ON THE AFORESAID ISSUE. IT WAS CONTENDED THEREIN THAT ON VERIFICATION OF RECORDS FOR ASSESSM ENT YEAR 2009-10, IT 3 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) WAS SEEN THAT THE ASSESSING OFFICER HAD MADE DISALL OWANCE UNDER SECTION 40(A)(IA) OF THE ACT OFRS.1,73,07,000/- ON ACCOUNT OF COST RECHARGES FROM GSISPL . THUS, SIMILARLY FOR ASSESS MENT YEAR 2010-11, THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAI MED REIMBURSEMENT OF COST RECHARGE EXPENSES OF RS.3,17,37,719/- ON WH ICH TDS HAS NOT BEEN DEDUCTED AND PAID AND, THEREFORE, THE SAME WAS TO BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. 2.3 IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSES SEE CONTENDED AS SUMMARIZED BY THE CIT THAT:- (I) THE ASSESSING OFFICER HAD LOOKED INTO THE REIM BURSEMENT OF COST RECHARGE EXPENSES CLAIMED AND WAS FULLY SATISFIED. THEREFORE, THERE IS NO QUESTION OF DISALLOWANCE OF THE SAME UNDER SECTI ON 40(A)(IA) OF THE ACT. (II) THE ASSESSING OFFICER DID NOT FEEL THAT THERE WAS ANY MATTER TO BE FURTHER INVESTIGATED SINCE HE WAS OF THE OPINION T HAT THERE WAS NO INCOME ELEMENT INVOLVED IN THE REIMBURSEMENT OF COS T RE-CHARGE EXPENSES. (III) WHEN TWO VIEWS ARE POSSIBLE, SECTION 263 OF T HE ACT CANNOT BE INVOKED. IT WAS ARGUED THAT FOR ASSESSMENT YEARS 2 009-10 AND 2011-12, THE FIRST APPELLATE AUTHORITY HAS DELETED THE DISAL LOWANCE MADE ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE ON RE-IMB URSEMENT OF EXPENSES. THEREFORE, IF THE ASSESSING OFFICER HAS ADOPTED ONE VIEW, THE CIT IN 263 PROCEEDINGS, CANNOT ADOPT A DIFFERENT VI EW AS THIS CONSTITUTES A CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN REV ISION PROCEEDINGS. 4 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) IT WAS ACCORDINGLY URGED BY THE ASSESSEE THAT THE LD. CIT, DROP THE REVISIONARY PROCEEDINGS. 2.4 THE LD. CIT ON AN ANALYSIS OF THE MATERIAL ON R ECORD OBSERVED THAT THE ASSESSEE HAD MADE A PAYMENT OF RS.3,17,36,719/ - TO AN ASSOCIATE CONCERN GSISPL, WHICH IS CLAIMED TO BE REIMBURSE MENT OF EXPENSES RECEIVED BY THE SAID RECIPIENT FOR CERTAIN SERVICE S PROVIDED AND COMMON EXPENSES INCURRED BY THEM ON BEHALF OF THE ASSESSEE. THE LD. CIT WAS OF THE VIEW THAT THE FACT THAT THESE EXPENS ES ARE INCURRED UNDER AN ARRANGEMENT/AGREEMENT BY GOLDMAN SACHS (INDIA) SECURITIES LTD. AND ARE SUBSEQUENTLY REIMBURSED BY THE ASSESSEE YE AR ON YEAR SUGGESTS THAT THERE IS AN INCOME ELEMENT INVOLVED A ND THEREFORE, TDS ON THE SAID PAYMENT IS TO BE MADE. THE LD. CIT WAS OF THE VIEW THAT WHILE THE ASSESSING OFFICER HAS LOOKED INTO THE DE TAILS ON RECORD, HE HAS NOT EXAMINED THE ENTIRE ARRANGEMENT TO SEE WHETHER THE RECIPIENT IS EARNING ANY INCOME IN THIS TRANSACTION AND FAILURE ON THE PART OF THE ASSESSING OFFICER TO DO SO HAS RENDERED THE ORDER OF ASSESSMENT TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IN THAT VIEW OF THE MATTER, THE LD. CIT CANCELLED THE ORDER OF ASSE SSMENT DATED 27/11/2013 FOR ASSESSMENT YEAR 2010-11 AND RESTORED THE MATTER TO THE ASSESSING OFFICER TO LOOK INTO WHETHER IN THE R EIMBURSEMENT OF EXPENSES THERE IS ANY INCOME ACCRUED TO THE RECIPIE NT I.E. TO M/S. GOLDMAN SACHS (INDIA) SECURITIES PVT. LTD. AND IF T DS WAS LIABLE TO BE DEDUCTED, THE ASSESSING OFFICER SHALL MAKE A FRESH ASSESSMENT INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 5 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) 3. AGGRIEVED BY THE ORDER UNDER SECTION 263 OF THE ACT DATED 18/2/2015 FOR ASSESSMENT YEAR 2010-11 PASSED BY THE CIT-I, MUMBAI, THE ASSESSEE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS:- GENERAL GROUND: 1. ERRED IN INITIATING AND PASSING THE ORDER UNDER SECTION 263 OF THE ACT DISALLOWING THE REIMBURSEMENTS PAID TO GOLDMAN SACH S (INDIA) SECURITIES PRIVATE LIMITED (GSISPL) UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NONDEDUCTION OF TAX AT SOURCE; 2. ERRED IN CONCLUDING THAT A RECURRING REIMBURSEME NT UNDER A COST SHARING AGREEMENT AUTOMATICALLY SUGGESTS AN INCOME ELEMENT ASSOCIATED WITH THE PAYMENT MADE BY THE APPELLANT, THEREFORE, WARRANTING A REQUIREMENT TO WITHHOLD TAX AT SOURCE. TWIN CONDITIONS MENTIONED UNDER SECTION 263 OF THE ACT I.E. ERRONEOUS ORDER AND PREJUDICIAL TO THE INTEREST OF REVENUE NOT SATI SFIED 3. ERRED IN PASSING THE ORDER UNDER SECTION 263 OF THE ACT, EVEN THOUGH THE TWIN CONDITIONS, THAT THE ORDER OF THE LEARNED DEPUTY COMMISSION OF INCOME TAX 1 (2) ('THE LEARNED AO') SHOULD BE ERR ONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, ARE NOT SATISFIED; LEARNED AO HAS TAKEN ONE POSSIBLE LEGAL VIEW 4. ERRED IN NOT APPRECIATING THE FACT THAT THE LEAR NED AO HAD TAKEN ONE LEGALLY POSSIBLE VIEW (WHICH IS AFFIRMED BY THE COM MISSIONER OF INCOMETAX (APPEALS) [CIT(A)] ORDER IN THE CASE OF THE APPELLA NT ITSELF IN AYS 200910 AND 201112) AND HENCE, THE ORDER UNDER SECTION 263 OF THE ACT IS LIABLE TO BE QUASHED; AND MERGER OF ORDER 5. ERRED IN NOT APPRECIATING THE FACT THAT THE ISSU E UNDER CONSIDERATION WAS A SUBJECT MATTER OF ADJUDICATION BEFORE THE CIT (A) IN OTHER YEARS AND HENCE, QUA THIS ISSUE, THE ORDER OF THE LEARNED AO GOT MERGED WITH CIT(A) AND HENCE, REVISION UNDER SECTION 263 OF THE ACT IS NOT PERMISSIBLE. 4.1.1 THE LD. SR.COUNSEL FOR THE ASSESSEE, SHRI JAH ANGIR MISTRY STATED THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY LEVERAGED ON THE EMPLOYEES AND OTHER INFRASTRUCTURE OF ITS AS SOCIATE CONCERN GSISPL AND ACCORDINGLY REIMBURSED THE COST RECHAR GE EXPENSES OF 6 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) RS.3,17,37,769/- INCURRED BY GSISPL ON BEHALF OF THE ASSESSEE. THE FACT IS THAT ALL THE MATERIAL IN RELATION TO REIMBU RSEMENT OF EXPENSES WAS PLACED BEFORE THE ASSESSING OFFICER IN ASSESSM ENT PROCEEDINGS VIDE LETTER DATED 9/1/2013, COPY PLACED AT PAGES 47 TO 5 5 OF THE PAPER BOOK AND THE LD. CIT IN THE IMPUGNED ORDER HAS ACCEPTED THAT THE ASSESSING OFFICER HAD LOOKED INTO THEM. THE SPECIFIC SUBMISS IONS WITH RESPECT TO THE RE-IMBURSEMENT OF EXPENSES TO GSISPL WERE AT PARAS 3 TO 3.23/ PAGES 48 TO 55 OF THE PAPER BOOK, WHEREIN INTER-ALI A, IT WAS SUBMITTED THAT THE REIMBURSEMENT OF EXPENSES WAS MADE IN PURS UANCE OF A COST ALLOCATION RECHARGE AGREEMENT THAT GSISPL SHALL RECHARGE ALL DIRECT COSTS INCURRED ON BEHALF OF GROUP COMPANIES AND ACC ORDINGLY THE ASSESSEE WAS TO REIMBURSE GSISPL ALLOCATED COSTS RE-CHARGE OF RS.3,17,37,719/-. SINCE IT WAS A MERE RE-IMBURSEME NT OF EXPENSES, NO TDS WAS MADE ON THE PAYMENTS TO GSISPL IN THI S REGARD THE ASSESSEE ALSO PLACED RELIANCE ON THE FOLLOWING JUDI CIAL PRONOUNCEMENTS IN SUPPORT OF THE PROPOSITION THAT NO TAX IS REQUIR ED TO BE DEDUCTED AT SOURCE WHEN THE PAYMENT IS IN THE NATURE OF REIMBUR SEMENT OF EXPENSES SINCE THERE IS NO ELEMENT OF INCOME EMBEDD ED THEREIN:- (I) J.B.BODA SURVEYORS PVT. LTD. (ITA NO.4252/MUM/2 009) (II)MAHYCO MONSANTO BIOTECH (INDIA) LTD. (ITA NO.58 42/MUM/2012) (III)CIT VS. SIEMENS AKTIONGESELLSCHAFT (310 ITR 32 0)(BOM) (IV) BAYER MATERIAL SCIENCE PVT. LTD. (ITA NO.7977/ MUM/2010) 4.1.2 THE LD. SR. COUNSEL CONTENDED THAT THE FACTS AS SUBMITTED ABOVE CLEARLY ESTABLISH THAT THE ORDER OF ASSESSMENT DATE D 27/11/2013 IS NOT ERRONEOUS AS THE ASSESSING OFFICER HAD APPLIED HIS MIND ON THE MATTER BY CONSIDERING THE SUBMISSIONS AND DETAILS PUT FORT H BY THE ASSESSEE ON THIS ISSUE VIDE LETTERS DATED 9/1/2013 AND 30/10/20 13. THE ASSESSING 7 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) OFFICERS FINDING COULD HAVE BEEN REGARDED AS ERRON EOUS ONLY WHEN THE ASSESSING OFFICER HAD NOT CONSIDERED THE ISSUE BEFO RE HIM OR NOT MADE ANY EXAMINATION OR ENQUIRY ON THE ISSUE OR OMITTED CONSIDERATION OF THE ISSUE IN QUESTION. THIS IS, ADMITTEDLY, NOT THE CA SE OF THE LD. CIT. IN THESE CIRCUMSTANCES, IT IS CONTENDED, THAT THE LD. CIT CANNOT SUBSTITUTE HIS VIEWS ON A PARTICULAR ISSUE IN RESPECT OF WHICH THE ASSESSING OFFICER HAS ALREADY TAKEN A VIEW IN THE MATTER THAT IS SUST AINABLE IN LAW AND THEREFORE, THE PROPOSED REVISION OF THE ORDER OF AS SESSMENT FOR ASSESSMENT YEAR 2010-11 AMOUNTS TO NOTHING BUT A CH ANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF S ECTION263 OF THE ACT . IN SUPPORT OF THE ABOVE PROPOSITION, THE LD. SR. CO UNSEL PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (I) MALABAR INDUSTRIAL COMPANY LTD. (2000) 243 ITR 83(SC) (II) MAX INDIA LTD. VS. CIT (2008) 295 ITR 282(SC) (III) GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOM) 4.1.3 RELIANCE WAS ALSO PLACED ON THE FOLLOWING JUD ICIAL PRONOUNCEMENTS IN SUPPORT OF THE PROPOSITION THAT THE CIT CANNOT SUBSTITUTE HIS VIEWS ON A PARTICULAR ISSUE IN RELA TION TO WHICH A VIEW HAS ALREADY BEEN TAKEN BY THE ASSESSING OFFICER:- (I) CIT VS. SUNBEAM AUTO LTD. (2010) 332 ITR 167 (D EL) (II)CIT VS. NIRMA CHEMICAL WORKS (P) LTD. (2009) 30 9 ITR 67 (GUJ) 4.1.4 THE LD. SR. COUNSEL, PLACING RELIANCE ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RE LIANCE COMMUNICATION LTD. IN ITA NO.1816 OF 2013 DATED 28/ 03/2016, ARGUED THAT, AS DISCUSSED EARLIER, SINCE ALL THE RELEVANT DETAILS /EXPENDITURE ON THE REIMBURSEMENT MADE BY THE ASSESSEE TO GSISPL WERE SUBMITTED TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, IT 8 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) CAN BE INFERRED THAT THE ASSESSING OFFICER NOT ONLY MADE ENQUIRIES BUT ALSO SATISFIED HIMSELF WITH THE ASSESSEES REPLIES FURNISHED IN SUPPORT OF ITS STAND. IT WAS ALSO BROUGHT TO THE NOTICE OF TH E BENCH THAT THE CO- ORDINATE BENCH OF THE ITAT IN ITS ORDER IN ITA NO.2 518/MUM/2013 IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 HA S HELD A SIMILAR VIEW AS THE ASSESSING OFFICER ON THE VERY SAME ISSU E AND HENCE IT CANNOT BE SAID THAT THE ORDER OF ASSESSMENT FOR ASS ESSMENT YEAR 2010- 11 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. IT WAS FINALLY CONTENDED THAT IN THE LIGHT OF THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT WAS NOT JUSTIFIED IN ASSU MING JUSTIFICATION FOR INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. 4.2 ON THE MERITS OF THE CASE, THE ASSESSEE SUBMITS THAT WHERE EXPENSES HAVE BEEN INCURRED BY THE RECIPIENT; IN TH IS CASE GSISPL ON BEHALF OF THE ASSESSEE AND THE SAME WERE REIMBURSED TO GSISPL, SUCH REIMBURSEMENT ARE MERE RECOUPMENT OF EXPENSES AND WOULD NOT CONSTITUTE INCOME OF THE RECIPIENT. HENCE, THERE I S NO LIABILITY CAST UPON THE ASSESSEE TO DEDUCT TAX AT SOURCE ON REIMBURSEME NT OF EXPENSES AND, THEREFORE, DISALLOWANCE UNDER SECTION 40(A)(IA ) OF THE ACT IS NOT WARRANTED. IN SUPPORT OF THE PROPOSITION THAT NO T AX IS REQUIRED TO BE DEDUCTED WHEN PAYMENT IS REIMBURSEMENT OF EXPENSES, RELIANCE WAS PLACED, INTER-ALIA, ON THE DECISION OF THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 (ITA NO.2518/MUM/2013). IT WAS ALSO SUBMITTED THAT IN T HE CASE ON HAND, WHILE THE ASSESSING OFFICER HAD MADE DISALLOWANCE O F REIMBURSEMENT OF EXPENSES UNDER SECTION40(A)(IA) OF THE ACT ON ACCOU NT OF NON-DEDUCTION 9 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) OF TAX IN ASSESSMENT YEARS 2009-10 AND 2011-12, THE LD. CIT(A) HAD DELETED THESE DISALLOWANCES AND THE ORDER OF LD. CIT(A) FOR ASSESSMENT YEAR 2009-10 WAS UPHELD BY THE CO-ORDINATE IN ITA NO.2518/MUM/2013 DATED 4/9/2015 (SUPRA). THEREFORE , THE IMPUGNED ORDER OF THE LD. CIT UNDER SECTION 263 OF THE ACT WAS ALSO NOT SUSTAINABLE ON MERITS ALSO. 4.3 PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE PLACED STRONG RELIANCE ON THE DECISION OF THE LD. CIT. IT WAS S UBMITTED THAT THE FACT THAT THE EXPENSES TO BE INCURRED BY THE ASSESSEE AR E MET OUT BY GSISPL UNDER AN AGREEMENT/ARRANGEMENT AND ARE SUBSEQUENTL Y REIMBURSED BY THE ASSESSEE SUGGESTS THAT THERE IS AN INCOME ELEME NT THEREIN AND, THEREFORE, ON SUCH PAYMENT OF REIMBURSEMENT, TAX OU GHT TO HAVE BEEN DEDUCTED AT SOURCE. THE ASSESSING OFFICERS FAILUR E TO LOOK INTO THE RECORDS OF THE ASSESSEE TO ASCERTAIN THE INCOME ASS OCIATED IN THESE TRANSACTIONS OF REIMBURSEMENT, RENDERED THE ORDER B OTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IT WAS CON TENDED THAT THERE IS NO QUESTION OF THERE BEING TWO VIEWS ON THIS ISSUE AS IT IS CLEAR THAT THERE IS INCOME ASSOCIATED WITH THE REIMBURSEMENT OF EXPENSE S TO GSISPL AND, THEREFORE, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE. 4.4.1 WE HAVE HEAD THE RIVAL CONTENTIONS AND PERUSE D AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. THE FACTS ON RECORD INDICATE THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD REIMBURSED G SISPL RS.3,17,37,719/- IN RESPECT OF DIRECT EXPENSES INCU RRED ON ITS BEHALF IN 10 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) PURSUANCE OF A COST RECHARGE AGREEMENT. AN APPRECI ATION OF THE MATERIAL ON RECORD SHOWS THAT THE MATERIAL/DETAILS , ETC. IN RELATION TO THE AFORESAID ISSUE OF RE-IMBURSEMENT OF EXPENSES W AS PLACED BEFORE THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT P ROCEEDINGS VIDE LETTER DATED 9/1/2013(COPY PLACED AT PAGE 47 TO 55 OF THE PAPER BOOK) AND 30/10/2013, WHEREBY IT WAS SUBMITTED, INTER-ALI A, THAT SINCE THE SAID EXPENDITURE WAS MERE REIMBURSEMENT OF EXPENDIT URE, NO TDS WAS MADE THEREON BY THE ASSESSEE WHILE MAKING THE PAYM ENTS TO GSISPL AS OSTENSIBLY THERE WAS NO INCOME ELEMENT EMBEDDED THEREIN. WE FIND FROM PERUSAL OF THE IMPUGNED ORDER THAT THE LD. CIT HAS HIMSELF ADMITTED THAT THE AFORESAID DETAILS WERE FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT P ROCEEDINGS, AND THEREFORE, IT IS CLEARLY NOT THE CASE OF THE LD. CI T THAT EITHER REQUIRED DETAILS WERE NOT FILED BEFORE THE ASSESSING OFFICER OR THAT NO ENQUIRY WAS CARRIED OUT IN THIS REGARD BY THE ASSESSING OFF ICER. THE LD. CITS GRIEVANCE SEEMS TO BE THAT THE ASSESSING OFFICER HA S NOT EXAMINED THE ISSUE FROM THE ANGLE OF WHETHER ANY INCOME WAS EMBE DDED IN THE SAID PAYMENT MADE TO GSISPL ON ACCOUNT OF REIMBURSEMEN T OF EXPENSES. IN OUR VIEW, THE UNDISPUTED FACT THAT THE ASSESSING OFFICER CALLED FOR AND EXAMINED THE DETAILS FIELD BY THE ASSESSEE ON T HE AFORESAID ISSUE OF REIMBURSEMENT OF EXPENSES TO GSISPL, MEANS THAT T HE ASSESSING OFFICER HAS ALREADY TAKEN A VIEW IN THE MATTER; THA T IS POSSIBLY SUSTAINABLE IN LAW, I.E. THAT NO TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE ON AFORESAID REIMBURSEMENT OF EXPENSES TO G SISPL. IN COMING TO THE VIEW THAT NO TDS IS TO BE DEDUCTED WHEN T HE PAYMENT IS IN THE NATURE OF RE-IMBURSEMENT OF EXPENSES SINCE THERE IS NO INCOME ELEMENT 11 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) IS EMBEDDED THEREIN, WE DRAW SUPPORT FROM THE DEC ISION OF THE CO- ORDINATE BENCH OF ITAT MUMBAI IN THE CASE OF J.P.BO DA SURVEYORS (SUPRA), MAHYCO MONSANTO BIOTECH (INDIA) LTD AND BAYER MATER IAL SCIENCE LTD. (SUPRA). 4.4.2 IN THIS FACTUAL AND LEGAL MATRIX OF THE CASE, AS DISCUSSED ABOVE, WHERE ADMITTEDLY THE DETAILS OF THE ISSUE OF REIMBU RSEMENT OF EXPENSES BY WAY OF PAYMENTS BY THE ASSESSEE TO GSISPL WERE CALLED FOR BY THE ASSESSING OFFICER, FILED BY THE ASSESSEE AND EXAMIN ED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS AND A POSSIBLE VIEW, SUSTAINABLE IN LAW, IS TAKEN BY HIM, THE IMPUGNED R EVISION ORDER, IN OUR VIEW IS NOTHING BUT A CHANGE OF OPINION BY THE LD. CIT WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF SECTION 263 OF THE ACT. IN COMING TO THIS VIEW, WE PLACE RELIANCE ON THE FOLLOWING JUDIC IAL PRONOUNCEMENTS OF THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL COM PANY LTD.(SUPRA) AND MAX INDIA LTD. V. CIT (SUPRA) AND OF THE HONBL E MUMBAI HIGH COURT IN GABRIEL INDIA LTD. (SUPRA). IN CIT V. SUNBEAM A UTO LTD.(SUPRA), THE HONBLE DELHI HIGH COURT HAS TAKEN THE VIEW THAT TH E CIT CANNOT SUBSTITUTE HIS VIEWS ON A PARTICULAR ISSUE IN RELAT ION TO WHICH A POSSIBLE VIEW HAS ALREADY BEEN TAKEN BY THE ASSESSING OFFICE R UNLESS IT IS UNSUSTAINABLE IN LAW. 4.4.3 IN THE LIGHT OF THE AFORESAID DISCUSSIONS(SUP RA), THE FACTUAL AND LEGAL MATRIX OF THE CASE CLEARLY EVIDENCES THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE ON HAND THAT ALL MATERIAL RELEVANT TO THE ISSUE OF REIMBURSEMENT OF EXPENSES BY THE A SSESSEE TO GSISPL 12 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) WERE FILED BY THE ASSESSEE BEFORE THE ASSESSING OFF ICER. IT CAN BE INFERRED THAT THE ASSESSING OFFICER EXAMINED THE SA ME AND WAS SATISFIED WITH THE DETAILS FILED AND TOOK A POSSIBLE VIEW IN THE MATTER. THIS VIEW OF THE ASSESSING OFFICER HAS ALSO BEEN UPHELD BY TH E CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE FOR AT 2009-10 IN ITA NO .2518/MUM/2013 DATED 4/09/2015 ON THE VERY SAME ISSUE. IN THESE C IRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT WAS NO T JUSTIFIED IN ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT. IN COMING TO THIS VIEW, WE DRAW SUPPORT FROM THE DECISION OF THE HON' BLE BOMBAY HIGH COURT IN CIT VS. RELIANCE COMMUNICATION LTD. IN ITA NO.1816 OF 2013 DATED 28/03/2016, RENDERED WHEREIN AT PARA 10 THERE OF THEIR LORDSHIPS HAVE HELD AS UNDER:- 10. IN THE CASE BEFORE US, THE CONCESSION OF THE ASSESSEES AUTHORIZED REPRESENTATIVE APART, WHAT THE TRIBUNAL FOUND AND O N ALL THE THREE ITEMS HIGHLIGHTED BY MR. TEJVEER SINGH IS THAT THERE WERE MATERIALS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER MADE ENQU IRIES ABOUT THE ABOVE REFERRED ASPECTS AND WHICH HAVE BEEN NOTED BY THE C OMMISSIONER. THE ASSESSEE MADE SUBMISSIONS BY PLACING ALL RELEVANT D OCUMENTS BEFORE THE ASSESSING OFFICER. THUS THE CASE DOES NOT FALL WIT HIN THE PARAMETERS LAID DOWN IN THE DECISION OF THE HONBLE SUPREME COURT A ND OTHER HIGH COURTS. THE MERE FACT THE ASSESSING OFFICER DID NOT MAKE A NY REFERENCE TO THESE THREE ISSUES IN THE ASSESSMENT ORDER CANNOT MAKE TH E ORDER ERRONEOUS WHEN THE ISSUES WERE INDEED LOOK INTO. THE ENTIRE DETAI LS WERE FILED AND THE ORDER ITSELF INDICATES THAT IT CAN BE INFERRED THAT THE A SSESSING OFFICER NOT ONLY MADE ENQUIRIES, BUT SATISFIED HIMSELF WITH THE ASSE SSEES REPLIES FURNISHED FROM TIME TO TIME IN SUPPORT OF ITS STAND. WHEN T HE TRIBUNAL CONCLUDES IN THIS MANNER AND FINALLY IN PARAGRAPH 16 HOLDS THAT THE ASSESSING OFFICER TOOK A PERFECTLY CORRECT OR A POSSIBLE VIEW, THEN, THE ORDER PASSED BY HIM CANNOT BE TERMED AS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COMMISSION OF INCOME TAX WAS NOT, THE REFORE, JUSTIFIED IN INVOKING SECTION 263 OF THE ACT. TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE, AS DISCUSSED ABOVE FROM PARA4.4.1 TO 4.4.3 OF THIS ORD ER, PLACING RELIANCE INTER-ALIA, ON THE VARIOUS JUDICIAL PRONOUNCEMENTS REFERRED TO (SUPRA), 13 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) WE ALSO DRAW SUPPORT FROM THE AFORESAID DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE COMMUNICA TIONS LTD. (SUPRA) TO HOLD THAT WHEN THE ASSESSING OFFICER EXAMINED TH E MATERIAL CALLED FOR AND PLACED BEFORE HIM BY THE ASSESSEE, WHICH FA CT IS ADMITTED BY THE LD. CIT, AND THE ASSESSING OFFICER TOOK A CORRECT P OSSIBLE VIEW IN THE MATTER, THE ORDER OF ASSESSMENT CANNOT BE TERMED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE, T HEREFORE, HOLD THAT THE LD. CIT WAS NOT JUSTIFIED IN ASSUMING JURISDICTION U/S. 263 OF THE ACT FOR ASSESSMENT YEAR 2010-11 IN THE CASE ON HAND AND, TH EREFORE, CANCEL THE IMPUGNED ORDER PASSED U/S. 263 OF THE ACT ON 18/2/2 015 FOR ASSESSMENT YEAR 2010-10 IN THE CASE ON HAND. 4.5.1 EVEN ON MERITS, WE CONCUR WITH AVERMENTS OF THE ASSESSEE THAT WHERE EXPENSES INCURRED BY GSISPLON ITS BEHALF AN D THE SAME ARE REIMBURSED, IT IS A MERE-RECOUPMENT OF EXPENSES. I T WOULD NOT CONSTITUTE INCOME OF THE RECIPIENT SO AS TO CAST A LIABILITY UPON THE ASSESSEE FOR DEDUCTION OF TAX AT SOURCE ON SUCH PA YMENTS AND, THEREFORE, DISALLOWANCE U/S. 40(A)(IA) OF THE ACT I S NOT WARRANTED. WE FIND THAT THE VERY SAME ISSUE WAS CONSIDERED BY A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AS SESSMENT YEAR 2009- 10 IN ITA NO.2518/MUM/2013 DATED 4/9/2015 AND AT PA RA 5,THEREOF HAS DISMISSED REVENUES APPEAL HOLDING THAT PAYMENTS MA DE BY THE ASSESSEE IN PURSUANCE OF COST ALLOCATION AND RECH ARGE AGREEMENT BETWEEN THE ASSESSEE AND GSISPL WAS PURELY ON ACC OUNT OF REIMBURSEMENT OF EXPENSES WHICH WERE INCURRED BY GS ISPL AND HENCE THERE BEING NO INCOME ELEMENT INVOLVED IN SUCH PAYM ENTS, THERE WAS 14 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) NO REQUIREMENT TO DEDUCT TDS THEREON. THE RELEVAN T PORTION OF THE DECISION AT PARA-5 IS AS UNDER:- 5. AFTER CONSIDERING THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AND ALSO THE SUBMISSIONS MADE BY THE PARTIES, WE FIND T HAT ASSESSEE HAS REIMBURSED EXPENDITURE AMOUNTING TO RS. 1,73,07,000 / TO GSIPL WHICH WERE INCURRED BY IT ON THE FOLLOWING HEADS : PARTICULARS AMOUNT(RS.) EMPLOYEE RELATED COST 11,238,600 RENT 456,719 CORPORATE RECHARGES 577,634 DEPRECIATION 34,385 COST OF SUPPORT FUNCTIONS SUCH AS HUMAN RESOURCE, FINANCE, LEGAL ETC. 5,000,000 TOTAL 17,307,000 IN PURSUANCE OF COST ALLOCATION & RECHARGED AGREEM ENT BETWEEN THE ASSESSEE AND THE SAID COMPANY, WHEREBY GSIPL WAS RE QUIRED TO INCUR COST AND MAKE PAYMENTS AFTER DEDUCTING THE TDS. SUCH COS T WAS THEN RECHARGED TO THE ASSESSEE. SUCH RECHARGED OF COST WAS PURELY ON ACCOUNT OF REIMBURSEMENT OF EXPENSES WHICH WERE INCURRED BY GS IPL AND HENCE THERE IS NO INCOME ELEMENT ON SUCH A PAYMENT. ONCE THAT IS S O, THEN THERE IS NO REQUIREMENT TO DEDUCT TDS, IN VIEW OF THE DECISION OF HONBLE HIGH COURT IN THE CASE OF CIT VS. SIEMENS (SUPRA). THUS, THE FIND ING OF THE CIT(A) THAT THERE WAS NO REQUIREMENT TO DEDUCT TDS ON SUCH REIMBURS EMENT OF COST IS FACTUALLY AND LEGALLY CORRECT AND IS THEREFORE, UPH ELD. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS TREATED AS DISMISSED FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009- 10(SUPRA), WE FIND THE IMPUGNED ORDER OF THE LD. CI T TO BE UNSUSTAINABLE ON THE SAID ISSUE EVEN ON THE MERITS AND THEREFORE, ON THIS GROUND ALSO WE CANCEL THE IMPUGNED ORDER OF TH E LD. CIT PASSED UNDER SECTION 263 OF THE ACT FOR ASSESSMENT YEAR 2 010-11. 15 ITA NO. 2227/MUM/2015 (ASSESSMENT YEAR : 2010-11) 5. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSM ENT YEAR 2010-11 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/05/2016 SD/- SD/- (RAMLAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 11/05/2016 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS