ACIT 25(2), MUMBAI V. ITD ITD CEM JV, MUMBAI

ITA 3580/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5255 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 16-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTHIKIYEN
• Keywords: Related party transaction; TDS; Set aside
• Section: 40(a)(ia); 194C; 192; 13; 22

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE SH. R. C. SHARMA , AM & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 3580 /MUM/2017 ( / ASSESSMENT YEAR: 2012 - 13 ) A CIT 25(2) R. N O. 508, C - 10, 5 TH FLOOR, PRATYAKSHKAR BHAVAN, BKC, BANDRA (EAST) MUMBAI - 400 051 / VS. M/S ITD ITD CEM JV 158, 1 ST FLOOR, DANI WOOLTEX COMPOUND, VIDYANAGARI MARG, KALINA, SANTACRUZ(EAST) MUMBAI - 400 098 ./ ./ PAN NO. A A A JI0262Q ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI ABI RAMA KARTHIKIYEN , D R / RESPONDENTBY : SHRI ANUJ KISNADWALA , AR / DATE OF HEARING : 26 /09 /201 8 / DATE OF PRONOUNCEMENT : 10/10/2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE REVENUE IS AGAINST THE ORDER OF LD. C IT (APPEAL) 34, MUMBAI DATED 03.02.17 F OR AY 20 12 - 13 . 2 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV G ROUND NO. 1 . 2 . THIS GROUND RAISED BY THE REVENUE RELATES TO CHA LLENGING THE ORDER OF LD. CIT(A) IN DELETING THE DISALLOWANCE THE ADMINISTRATIVE EXPENSES OF RS. 1,58,53,457/ - U/S 40(A)(IA) AND 40(BA) OF THE I.T. ACT. 3 . AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED BEFORE US THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED ON MERITS IN FAVOUR OF ASSESSEE BY T HE ORDER OF THE COORDINA T E BENCH OF ITAT IN ITA NO. 1244 & 1245 /MUM/15 F OR AY 2010 - 11 & 2011 - 12 IN ASSESSEES OWN CASE. 4 . ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY AO . 5 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF HONBLE 3 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV ITAT IN ITA NO. 1244 & 1245/MUM/15 FOR AY 2010 - 11 & 2011 - 12 IN ASSESSEES OWN CASE. THE OPERATIVE PORTION OF THE ORDER OF HONBLE I T AT CONTAINED IN PARA NO. 2.1 TO 2.3 , WHICH IS REPRODUCED BELOW: - 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE AFORESAID ORDER DATED 30/07/2014 FOR READY REFERENCE AND ANALYSIS: - 6. THE REVENUE HAS RAISED FOLLOWING GROUNDS; - (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.1 ,44,77,018/ - - U/S. 40(A)(IA) OF THE I. T. ACT BY HOLDING THAT THERE IS NO CONTRACT AT ALL BETWEEN ASSESSEE &. JV PARTNERS, THEREFORE, THERE IS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE ON REIMBURSEMENT OF EXPENDITURE INCURRED BY JV PARTNERS; UNLESS TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE BY VIRTUE OF THE NATURE OF RECEIPT IN THE HANDS OF THE ULTIMATE RECIPIENT, AND SUCH TAX HAS NOT BEEN DEDU CTED BY THE ASSESSEE WITHOUT APPRECIATING THE FACTS: 4 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV (A) THE PAYMENT MADE TO THE JOINT VENTURE PARTNER ON ACCOUNT OF REIMBURSEMENT OF THE ADMINISTRATIVE EXPENSE A/READY INCURRED CAN VERY WELL BE CONSTRUED AS CONTRACTUAL PAYMENT EVEN IN ABSENCE OF FONNAL W RITTEN CONTRACT AND TDS PROVISION OF THE IT ACT IS APPLICABLE ON THE SAME. (B) ONLY ON THE BASE OF ABSENCE OF A WRITTEN AGREEMENT BETWEEN THE SAID PARTIES THE SAID PAYMENTS CANNOT BE TERMED AS NON CONTRACTUAL PAYMENT AND ESCAPE THE PROVISIONS OF SECTION 4 0(A)(IA) OF I. T. ACT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF RS.7,18,035/ - BEING DIFFERENCE IN OPENING WORK - INPROGRESS SOLELY RELYING ON THE SUBMISSION OF THE ASSESSEE MADE DURING THE APPELLATE PROCEEDINGS THAT THE FIGURE OF WORK - IN PROGRESS SHOWN IN P&L A/C FOR F. Y. 2006 - 07 HAS BEEN BROKEN UP INTO TWO PARTS IN THE BALANCE SHEET AS ON 31ST MARCH, 2007 WITHOUT APPRECIATING THE FACT THAT THERE WAS NO NECESSITY FOR THE ASS ESSEE TO SEGREGATE THE AMOUNT AS SUCH AND IT IS BASIC AND ESTABLISHED FACT THAT CLOSING WIP OF ANY PREVIOUS YEAR WOULD BECOME OPENING OF WIP FOR THE NEXT YEAR. 5 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV 7. GROUND NO. 1 IS REGARDING DISALLOWANCE OF REIMBURSEMENT OF EXPENDITURE U/S 40(A)(IA). 8. WE HAVE HEARD THE LD. AR AS WELL AS LD. OR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT AN IDENTICAL ISSUE WAS CONSIDERED AND DECIDED BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JOINT VENTURE PARTNER (SUPRA) OF THE ASSESSEE VIDE ORDER DATED 9.4.2014 IN PARA 18 TO 23 AS UNDER: - ' 18. WE HAVE HEARD THE DETAILED ARGUMENTS, PERUSED THE EVIDENCES PLACED IN APB AND THE WRITTEN SUBMISSIONS, PLACED BEFORE US. 19.IN SO FAR AS PROVISION OF SECTION 40(A)(IA) IS CONCERNED, IT IS VIRTUALLY ACC EPTED BY THE AO IN REMAND PROCEEDINGS, WHEREIN, THE AO SUBMITTED, 'THE DEBIT NOTES RAISED BY THE ITO CEMENTATION INDIA LTD WERE TEST CHECKED AND THE AMOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE WAS VERIFIED AND GENUINENESS OF THE SAME HAS BEEN PROVED BY T HE ASSESSEE'. IN SUCH CIRCUMSTANCE, WE DO NOT FIND ANY REASON TO SUSTAIN THE DISALLOWANCE U/S 40(A)(IA) FOR NON DEDUCTION OF TAS, AS THE PAYMENTS MADE BY THE ASSESSEE TO ITD CEMENTATION WAS' 'ONLY ON ACCOUNT OF SALARIES AND RELATED EXPENSES INCURRED BY THE COMPANY. 6 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV 20.NOW WE DIVERT OUR ATTENTION TO THE PROVISION OF SECTION 40(BA). 21.THE PROVISION IS VERY SPECIFIC, BECAUSE IT CALLS FOR DISALLOWANCE OF PAYMENT OF ANY KIND BY THE AOP TO ITS MEMBER. WE WOULD HAVE ACCEPTED THE ARGUMENTS OF THE DR/ASSESSING OF FICER/CIT(A), HAD THE MEMBER OF THE ASSESSEE WERE AN INDIVIDUAL, BECAUSE, THE PROVISION HAS THE ENRICHMENT OF MEMBERS THROUGH BACK DOOR. BUT HERE IS THE CASE OF A COMPANY, WHICH IS A SEPARATE JURIDICAL PERSON, DISTINCT FROM ITS SHAREHOLDERS/DIRECTORS. IN T HE INSTANT CASE, THE PAYMENT HAS BEEN MADE ON ACCOUNT OF REIMBURSEMENT OF AN EXPENSE MADE BY THE COMPANY. HERE THE QUESTION OF ENRICHMENT OF A MEMBER DOES NOT ARISE, AS HAS BEEN HELD EARLIER THAT THERE IS NO PROFIT ELEMENT. 22.IN SUCH A CIRCUMSTANCE, PROV ISION OF SECTION 40(BA) DOES NOT GEL ATTRACTED. 23.WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE AND DELETE THE DISALLOWANCE OF RS. 4,99, 19,593/ - , AS RAISED IN GROUND NO. 2.' 7 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV 9. THE CIT(A) DELETED THE DISALLOWANCE MADE BY ASSESSING OFFICER ON THE GROUND THAT THERE IS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE ON REIMBURSEMENT OF EXPENDITURE INCURRED BY THE JOINT VENTURE PARTNER. THERE IS NO DISPUTE THAT THE AMOUNT INVOLVED IS THE REIMBURSEMENT OF EXPENSES INCURRED BY THE JOINT VENTURE PARTNER, THEREFORE, FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE CASE OF JOINT VENTURE PARTNER, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA). 2.2. IT IS ALSO NOTED THAT IN THE CASE OF M/S ITD CEM INDIA JV VS ADDL. CIT (ITA NO.4255/MUM/2012), THE APPEAL OF THE ASSESSEE WAS ADJUDICATED VIDE ORDER DATED 09/04/2014. WHILE DISPOSING OF GROUND NO. 2, 3 & 4 WITH RESPECT TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT, THE TRIBUNAL DELIBERATED UPON THE DISALLOWANCE MADE ON ACCOUNT OF SALARY, BANK GUARANTEE AND ADMINISTRATIVE EXPENSES. THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER FOR READY REFERENCE AND ANALYSIS: - 3. GROUND NO. 2, 3 & 4 PERTAIN TO DISALLOWAN CE U/S 40(A)(IA). 8 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD NOT DEDUCTED TAS FOR PAYMENTS MADE BY IT ON ACCOUNT OF SALARY AND RELATED EXPENSES, BANK GUARANTEE AND ADMINISTRATIVE EXPENSES, PAID BY THE JV TO ITD CEMENT ATION INDIA LTD. (ITDCIL). ACCORDING TO THE AO, THEREFORE, THE PAYMENTS WERE HIT BY THE PROVISIONS OF SECTION 40(A)(IA) AND THUS DISALLOWABLE. THE AO FURTHER HELD THAT EVEN U/S 40(BA) SALARY AND RELATED EXPENSES AND COMMISSION EXPENSE SHALL NOT BE ALLOWED, BECAUSE IF IN CASE OF AN AOP, ANY PAYMENT OF SALARY OR REMUNERATION OR WHATEVER NAMED CALLED SHALL NOT BE ALLOWABLE. THE SPECIFIC DISALLOWANCES ARE DISALLOWANCE U/S 40(A)(IA) AMOUNT (IN RS.) SALARY 4,99,19,593 BANK GUARANTEE 45,80,658 ADMINISTRATIVE EXPEN SES 2,39,64,463 5. THE FACTS ARE THAT THE ASSESSEE IS A JOINT VENTURE AOP BETWEEN ITD CEMENTATION AN ITALIAN COMPANY, FORMED FOR REHABILITATION AND UPGRADING OF 35 KM HIGHWAY IN THE STATE OF MADHYA PRADESH ON NH25 AND CONSTRUCTION OF BYPASS AK KOTA IN RAJASTHAN ON NH76, BEING A PART OF EAST - WEST - CORRIDOR. 6. THE BUSINESS AND CONSTRUCTION ACTIVITY IS BEING CARRIED ON AND 9 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV COMING FROM THE PRECEDING YEAR, AS MENTIONED IN THE ASSESSMENT ORDER. 7. THE ASSESSEE CONTENDED THE ADDITION BEFORE THE CIT(A ) AND ALSO PLACED CERTAIN FRESH EVIDENCE TO SUPPORT ITS CONTENTIONS. THE CIT(A) SOUGHT FURTHER COMMENTS FROM THE AO, WHO SUBMITTED HIS REMAND REPORT VIDE LETTER DATED 31.01.2012. 8. IN THE REMAND PROCEEDINGS, THE ASSESSEE SUBMITTED THAT IT REIMBURSED THE EXPENSES PERTAINING TO SALARIES TO ITD CEMENTATION INDIA PVT LTD, WHO HAD PAID THE EMPLOYEES OF THE ASSESSEE AND LATER ON CLAIMED THE SAME BY RAISING DEBIT NOTES. THESE FACTS WERE CHECKED AND VERIFIED BY THE AO AND FOUND THE SAME TO BE CORRECT. THE AO, HOW EVER, LEFT THE DECISION TO BE TAKEN BY THE CIT(A) AS THE AO HAD FAILED TO DEDUCT TAS. 9. THE ASSESSEE ALSO SUBMITTED THAT SECTION 40(BA) COULD NOT INVOKED BECAUSE THERE WAS NO EMPLOYER EMPLOYEE RELATIONSHIP. BOTH THE ENTITIES OF PART OF THE JV AND THEREFORE THE PAYMENTS ON ACCOUNT OF SALARY CANNOT COME WITHIN THE PARAMETERS OF SECTION 40(BA). 10. THE CIT(A), AFTER CONSIDERING THE REMAND REPORT AND THE DETAILED ARGUMENTS BY THE ASSESSEE, 10 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV SUSTAINED THE DISALLOWANCE, BOTH ON ACCOUNT OF NON DEDUCTION O F TAS U/S 40(A)(IA) AND ALSO U/S 40(BA). ACCORDING TO THE IN CASE OF AOP ANY PAYMENT OF INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION BY WHATSOEVER NAME CALLED, MADE BY SUCH ASSOCIATION TO A MEMBER OF SUCH ASSOCIATION SHALL NOT BE ALLOWED AS DEDUCTIB LE EXPENDITURE. 11. SIMILAR OBSERVATIONS WERE MADE TO TAKE THE DECISION TO SUSTAIN THE DISALLOWANCE MADE ON EXPENSE BOOKED ON ACCOUNT OF PAYMENT OF COMMISSION. 12. AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 13. BEFORE US, THE AR CONTENDED THAT NO DISA LLOWANCE HAS BEEN MADE IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08, WHICH WERE FRAMED U/S 143(3). THEREFORE, ACCORDING TO THE AR TO CARRY ON A CONSISTENT STAND, NO DISALLOWANCE IS CALLED FOR, AS THE SAME WORK AND SIMILAR TREATMENT TO ACCOUNTS AND ASSESSMENT W ERE CARRIED ON IN THE TWO IMMEDIATE PRECEDING YEARS. 14. IN ANY CASE, THE AO IN THE REMAND PROCEEDINGS HAS ACCEPTED THE FACT THAT ITD CEMENTATION INDIA LTD. PAID SALARIES TO EMPLOYEES 11 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV ON BEHALF OF THE ASSESSEE, WHICH WERE RECOVERED BY THE COMPANY FROM THE ASSESSEE BY RAISING DEBIT NOTES AND WERE PURELY IN THE FORM OF REIMBURSEMENT AND NO PROFIT ELEMENT INVOLVED IN SUCH PAYMENTS. 15. ON THE ISSUE OF DISALLOWANCE U/S 40(BA), THE DR REFERRED TO THE REMAND REPORT SENT BY THE AO THAT IN CASE OF ANY PAYMENT IS MADE BY THE AO TO ITS MEMBER, IN SUCH A CASE, THE AMOUNT SHALL BE DISALLOWED. 16. THE AR ALSO SUBMITTED A WRITTEN SUBMISSION, WHICH WAS DULY FORWARDED TO THE DR, WHEREIN THE AR, FURTHER CLARIFIED THE STAND TAKEN BY THE ASSESSEE. 17. ON THE OTHER HAND, TH E DR PLACED RELIANCE ON THE DECISION OF THE REVENUE AUTHORITIES AND JUSTIFIED THE DISALLOWANCE OF RS. 4,99,19,593/ - ON ACCOUNT OF SALARY AND RELATED EXPENSES. 18. WE HAVE HEARD THE DETAILED ARGUMENTS, PERUSED THE EVIDENCES PLACED IN APB AND THE WRITTEN SU BMISSIONS, PLACED BEFORE US. 19. IN SO FAR AS PROVISION OF SECTION 40(A)(IA) IS CONCERNED, IT IS VIRTUALLY ACCEPTED BY THE AO IN REMAND PROCEEDINGS, WHEREIN, THE AO SUBMITTED, 12 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV THE DEBIT NOTES RAISED BY THE ITD CEMENTATION INDIA LTD WERE TEST CHECKED AND THE AMOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE WAS VERIFIED AND GENUINENESS OF THE SAME HAS BEEN PROVED BY THE ASSESSEE. IN SUCH CIRCUMSTANCE, WE DO NOT FIND ANY REASON TO SUSTAIN THE DISALLOWANCE U/S 40(A)(IA) FOR NON DEDUCTION OF TAS, AS THE PAYMENTS MADE BY THE ASSESSEE TO ITD CEMENTATION WAS ONLY ON ACCOUNT OF SALARIES AND RELATED EXPENSES INCURRED BY THE COMPANY. 20. NOW WE DIVERT OUR ATTENTION TO THE PROVISION OF SECTION 40(BA) 21. THE PROVISION IS VERY SPECIFIC, BECAUSE IT CALLS FOR DISALLOWANC E OF PAYMENT OF ANY KIND BY THE AOP TO ITS MEMBER. WE WOULD HAVE ACCEPTED THE ARGUMENTS OF THE DR/AO/CIT(A), HAD THE MEMBER OF THE ASSESSEE WERE AN INDIVIDUAL, BECAUSE, THE PROVISION HAS THE ENRICHMENT OF MEMBERS THROUGH BACK DOOR. BUT HERE IS THE CASE OF A COMPANY, WHICH IS A SEPARATE JURIDICAL PERSON, DISTINCT FROM ITS SHAREHOLDERS/DIRECTORS. IN THE INSTANT CASE, THE PAYMENT HAS BEEN MADE ON ACCOUNT OF REIMBURSEMENT OF AN EXPENSE MADE BY THE COMPANY. HERE THE QUESTION OF ENRICHMENT OF A 13 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV MEMBER DOES NOT AR ISE, AS HAS BEEN HELD EARLIER THAT THERE IS NO PROFIT ELEMENT. 22. IN SUCH A CIRCUMSTANCE, PROVISION OF SECTION 40(BA) DOES NOT GET ATTRACTED. 23. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM 25. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD NOT DEDUCTED TAS FOR PAYMENTS MADE BY IT ON ACCOUNT BANK GUARANTEE TAKEN BY THE ITDCIL ON BEHALF OF THE ASSESSEE JV. THE PAYMENT OF COMMISSION RELATED TO THE BANK GUARANTEE COMMISSION, PAID BY T HE JV TO ITD CEMENTATION INDIA LTD. ACCORDING TO THE AO, THEREFORE, THE PAYMENTS WERE HIT BY THE PROVISIONS OF SECTION 40(A)(IA) AND THUS DISALLOWABLE. THE AO FURTHER HELD THAT EVEN U/S 40(BA) SALARY AND RELATED EXPENSES AND COMMISSION EXPENSE SHALL NOT BE ALLOWED, BECAUSE IF IN CASE OF AN AOP, ANY PAYMENT OF SALARY OR REMUNERATION OR WHATEVER NAMED CALLED (HEREIN COMMISSION) SHALL NOT BE ALLOWABLE. 26. THE ASSESSEE CONTENDED THE DISALLOWANCE MADE ON ADDITION BEFORE THE CIT(A) AND ALSO PLACED CERTAIN FRESH EVIDENCE TO SUPPORT ITS 14 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV CONTENTIONS. THE CIT(A) SOUGHT FURTHER COMMENTS FROM THE AO, WHO SUBMITTED HIS REMAND REPORT VIDE LETTER DATED 31.01.2012. 27. IN THE REMAND PROCEEDINGS, THE ASSESSEE SUBMITTED THAT IT REIMBURSED THE EXPENSES PERTAINING TO BANK GU ARANTEE COMMISSION, PAID BY ITD CEMENTATION INDIA LTD., ON BEHALF OF THE ASSESSEE JV AND LATER ON CLAIMED THE SAME BY RAISING DEBIT NOTES. THESE FACTS WERE CHECKED AND VERIFIED BY THE AO AND FOUND THE SAME TO BE CORRECT. THE AO, HOWEVER, LEFT THE DECISION TO BE TAKEN BY THE CIT(A) AS THE AO HAD FAILED TO DEDUCT TAS. 28. THE ASSESSEE ALSO SUBMITTED THAT SECTION 40(BA) COULD NOT BE INVOKED BECAUSE THERE WAS NO EMPLOYEREMPLOYEE RELATIONSHIP. BOTH THE ENTITIES OF PART OF THE JV AND THEREFORE THE PAYMENTS ON AC COUNT OF SALARY CANNOT COME WITHIN THE PARAMETERS OF SECTION 40(BA). 29. THE CIT(A), AFTER CONSIDERING THE REMAND REPORT AND THE DETAILED ARGUMENTS BY THE ASSESSEE, SUSTAINED THE DISALLOWANCE, BOTH ON ACCOUNT OF NON DEDUCTION OF TAS U/S 40(A)(IA) AND ALSO U/S 40(BA). ACCORDING TO THE CIT(A), IN CASE OF AOP ANY PAYMENT OF INTEREST, SALARY, BONUS, 15 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV COMMISSION OR REMUNERATION BY WHATSOEVER NAME CALLED, MADE BY SUCH ASSOCIATION TO A MEMBER OF SUCH ASSOCIATION SHALL NOT BE ALLOWED AS DEDUCTIBLE EXPENDITURE. 30. THE CIT(A), THEREFORE, SUSTAINED THE DISALLOWANCE MADE ON EXPENSE BOOKED ON ACCOUNT OF PAYMENT OF COMMISSION. 31. AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 32. BEFORE US, THE AR CONTENDED THAT NO DISALLOWANCE HAS BEEN MADE IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08, WHICH WERE FRAMED U/S 143(3). THEREFORE, ACCORDING TO THE AR TO CARRY ON A CONSISTENT STAND, NO DISALLOWANCE IS CALLED FOR, AS SIMILAR TREATMENT TO ACCOUNTS AND ASSESSMENT WERE ACCORDED ON IN THE TWO IMMEDIATE PRECEDING YEARS. 33. IN ANY CASE, THE AO IN THE REMAND PROCEEDINGS HAS ACCEPTED THE FACT THAT THE PAYMENTS MADE TO ITD CEMENTATION INDIA LTD. WERE ON ACCOUNT OF COMMISSION AND MOREOVER, THIS AMOUNT IS ALSO NOT AN EXPENSE AS PER PROVISION OF SEC. 40(BA) WHEREIN IT IS STIPULATED THAT IN CASE OF ASSOCIATION OF PERSON, ANY PAYMENT OF INTEREST, SALARY, BONUS, COMMISSION OR 16 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV REMUNERATION BY WHATEVER NAME CALLED, MADE BY SUCH ASSOCIATION TO A MEMBER OF SUCH ASSOCIATION SHALL NOT BE ALLOWED AS DEDUCTIBLE EXPENDITURE TO OPPOSE THE AFORESAID OB SERVATIONS OF AO, THE ASSESSEE SUBMITS, THAT COMMISSION WAS PAID TO BANK BY ITD CEMENTATION INDIA LTD. (CO - VENTURE) ON BEHALF OF THE ASSESSEE, AND THE ASSESSEE LATER REIMBURSED THE SAME TO ITD CEMENTATION INDIA LTD. IT IS NOT A COMMISSION PAYMENT BY THE AS SESSEE TO ITD CEMENTATION INDIA LTD. WARRANTING ANY TAX DEDUCTION AT SOURCE. THEREFORE, NEITHER THE PROVISION OF SECTION 40(A)(IA) NOR THE PROVISION OF 40(BA) OF INCOME TAX ACT IS ATTRACTED IN THIS CASE. THE ADDITION OF RS. 45,80,658/ - MADE BY THE AO AND A S SUCH THE COUNSEL FOR THE ASSESSEE PRAYED FOR DELETION OF THE SAID PAYMENT OF COMMISSION/ADDITION. 34. ON THE ISSUE OF DISALLOWANCE U/S 40(BA ), THE DR REFERRED TO THE REMAND REPORT SENT BY THE AO THAT IN CASE OF ANY PAYMENT IS MADE BY THE AO TO ITS MEMBER, IN SUCH A CASE, THE AMOUNT SHALL BE DISALLOWED. 35. THE AR ALSO SUBMITTED A WRITTEN SUBMISSION, WHICH WAS DULY FORWARDED TO THE DR, WHEREIN THE 17 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV AR, FURTHER CLARIFIED THE STAND TAKEN BY THE ASSESSEE. 36. ON THE OTHER HAND, THE DR PLACED RELIANCE ON THE DECISION OF THE REVENUE AUTHORITIES AND JUSTIFIED THE DISALLOWANCE OF COMMISSION OF RS. 45,80,658/ - ON ACCOUNT OF COMMISSION AS BANK GUARANTEE EXPENSES. 37. WE HAVE HEARD THE DETAILED ARGUMENTS, PERUSED THE EVIDENCES PLACED IN APB AND THE WRITTEN SUBMISSIONS, PLACED BEFORE US. 38. IN SO FAR AS PROVISION OF SECTION 40(A)(IA) IS CONCERNED, IT IS VIRTUALLY ACCEPTED BY THE AO IN REMAND PROCEEDINGS , WHEREIN, THE AO SUBMITTED, THE DEBIT NOTES RAISED BY THE ITD CEMENTATION INDIA LTD WERE TEST CHECKED AND THE AMOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE WAS VERIFIED AND GENUINENESS OF THE SAME HAS BEEN PROVED BY THE ASSESSEE. IN SUCH CIRCUMSTANCE, W E DO NOT FIND ANY REASON TO SUSTAIN THE DISALLOWANCE U/S 40(A)(IA) FOR NON DEDUCTION OF TAS, AS THE PAYMENTS MADE BY THE ASSESSEE TO ITD CEMENTATION WAS ONLY ON ACCOUNT OF REIMBURSEMENT OF COMMISSION FOR THE PURPOSE OF TAKING BANK GUARANTEE, INCURRED BY IT DCIL. 18 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV 39. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE AND DELETE THE DISALLOWANCE OF COMMISSION EXPENSES INCURRED BY THE ASSESSEE AT RS. 45,80,658/ - , AS RAISED IN GROUND NO. 3. 40. GROUND 4 RELATE S TO REIMBURSEMENT OF ADMINISTRATIVE EXPENSES OF RS. 2,39,64,463/ - FOR NONE DEDUCTION OF TDS U/S 40(A)(IA). 41. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD NOT DEDUCTED TAS FOR PAYMENTS MADE BY IT ON ACCOUNT OF ADMINISTRA TIVE EXPENSES, PAID BY THE JV TO ITD CEMENTATION INDIA LTD. ACCORDING TO THE AO, THEREFORE, THE PAYMENTS WERE HIT BY THE PROVISIONS OF SECTION 40(A)(IA) AND THUS DISALLOWABLE. THE AO FURTHER HELD THAT EVEN U/S 40(BA) THE EXPENSE SHALL NOT BE ALLOWED, BECAU SE IF IN CASE OF AN AOP, ANY PAYMENT OF SALARY OR REMUNERATION OR WHATEVER NAMED CALLED (IN THE PRESENT CONTEXT, ADMINISTRATION EXPENSES) SHALL NOT BE ALLOWABLE. 42. THE ASSESSEE CONTENDED THE ADDITION BEFORE THE CIT(A) AND ALSO PLACED CERTAIN FRESH EVIDE NCE TO SUPPORT ITS CONTENTIONS. THE CIT(A) SOUGHT FURTHER COMMENTS FROM THE AO, WHO SUBMITTED HIS REMAND REPORT VIDE LETTER DATED 31.01.2012. 19 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV 43. IN THE REMAND PROCEEDINGS, THE ASSESSEE SUBMITTED THAT IT REIMBURSED THE EXPENSES PERTAINING TO ADMINISTRATIVE EXPENSES TO ITD CEMENTATION INDIA LTD., INCURRED ON BEHALF OF THE ASSESSEE, AND LATER ON CLAIMED THE SAME BY RAISING DEBIT NOTES. THESE FACTS WERE CHECKED AND VERIFIED BY THE AO AND FOUND THE SAME TO BE CORRECT. THE AO, HOWEVER, LEFT THE DECISION TO BE TA KEN BY THE CIT(A) AS THE AO HAD FAILED TO DEDUCT TAS. 44. THE ASSESSEE ALSO SUBMITTED THAT SECTION 40(BA) COULD NOT INVOKED BECAUSE THERE WAS NO EMPLOYEREMPLOYEE RELATIONSHIP. BOTH THE ENTITIES OF PART OF THE JV AND THEREFORE THE PAYMENTS ON ACCOUNT OF SA LARY CANNOT COME WITHIN THE PARAMETERS OF SECTION 40(BA). 45. THE CIT(A), AFTER CONSIDERING THE REMAND REPORT AND THE DETAILED ARGUMENTS BY THE ASSESSEE, SUSTAINED THE DISALLOWANCE, ON ACCOUNT OF NON DEDUCTION OF TAS U/S 40(A)(IA). ACCORDING TO THE CIT(A) , IN CASE OF AOP ANY PAYMENT OF INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION BY WHATSOEVER NAME CALLED, MADE BY SUCH ASSOCIATION TO A MEMBER OF SUCH ASSOCIATION SHALL NOT BE ALLOWED AS DEDUCTIBLE EXPENDITURE. THE CIT(A), THEREFORE, SUSTAINED 20 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV THE DISALLOWANCE MADE ON EXPENSE BOOKED ON ACCOUNT OF PAYMENT TOWARDS ADMINISTRATIVE EXPENSES. 47. AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 48. BEFORE US, THE AR CONTENDED THAT NO DISALLOWANCE HAS BEEN MADE IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08, WHICH WERE FRAMED U/S 143(3). THEREFORE, ACCORDING TO THE AR TO CARRY ON A CONSISTENT STAND, NO DISALLOWANCE IS CALLED FOR, SIMILAR TREATMENT TO ACCOUNTS AND ASSESSMENT WERE ACCORDED ON IN THE TWO IMMEDIATE PRECEDING YEARS. 49. IN ANY CASE, THE AO IN THE REMAND PROCEEDINGS HAS ACCEPTED THE FACT THAT THE PAYMENTS MADE TO ITD CEMENTATION INDIA LTD. WERE ON ACCOUNT OF ADMINISTRATIVE EXPENSES INCURRED BY THE ASSESSEE FOR WHICH DEBIT NOTES WERE RAISED BY ITD CEMENTATION INDIA LTD WERE TEST CHECKED AND THE AMOUNT OF E XPENDITURE CLAIMED ON ACCOUNT OF ADMINISTRATIVE EXPENSES BY THE ASSESSEE WAS VERIFIED AND GENUINENESS OF THE SAME HAS BEEN PROVED BY THE ASSESSEE. IT IS PERTINENT TO NOTE HERE THAT THIS DETAIL WAS NOT GIVEN BY THE AUDITORS IN THE RELATED PARTY TRANSACTIONS IN THE AUDIT REPORT SUBMITTED DURING 21 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV THE SCRUTINY PROCEEDINGS. MOREOVER, THESE PAYMENTS ARE NOTHING BUT PAYMENT MADE TO THE CO - VENTURES FOR DOING CERTAIN JOB ON BEHALF OF THE ASSESSEE, WHICH CLEARLY ATTRACTS THE PROVISIONS OF TDS U/S 193C OF THE INCOMETAX ACT AS THE SAME IS NOTHING BUT CONTRACTUAL PAYMENTS. 50. THE DR REFERRED TO THE REMAND REPORT SENT BY THE AO THAT IN CASE OF ANY PAYMENT IS MADE BY THE AO TO ITS MEMBER, IN SUCH A CASE, THE AMOUNT SHALL BE DISALLOWED. 51. THE AR ALSO SUBMITTED A WRITTEN SUBMISSION, WHICH WAS DULY FORWARDED TO THE DR, WHEREIN THE AR, FURTHER CLARIFIED THE STAND TAKEN BY THE ASSESSEE. 52. ON THE OTHER HAND, THE DR PLACED RELIANCE ON THE DECISION OF THE REVENUE AUTHORITIES AND JUSTIFIED THE DISALLOWANCE OF RS. 2,39,64,463/ - ON ACCOUNT OF ADMINISTRATIVE AND RELATED EXPENSES. 53. WE HAVE HEARD THE DETAILED ARGUMENTS, PERUSED THE EVIDENCES PLACED IN APB AND THE WRITTEN SUBMISSIONS, PLACED BEFORE US. 54. IN SO FAR AS PROVISION OF SECTION 40(A)(IA ) IS CONCERNED, IT IS VIRTUALLY ACCEPTED BY THE AO IN REMAND PROCEEDINGS, WHEREIN, THE AO SUBMITTED, 22 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV THE DEBIT NOTES RAISED BY THE ITD CEMENTATION INDIA LTD WERE TEST CHECKED AND THE AMOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE WAS VERIFIED AND GENUINENE SS OF THE SAME HAS BEEN PROVED BY THE ASSESSEE. IN SUCH CIRCUMSTANCE, WE DO NOT FIND ANY REASON TO SUSTAIN THE DISALLOWANCE U/S 40(A)(IA) FOR NON DEDUCTION OF TAS, AS THE PAYMENTS MADE BY THE ASSESSEE TO ITD CEMENTATION WAS ONLY ON ACCOUNT OF ADMINISTRATI VE AND RELATED EXPENSES INCURRED BY THE COMPANY. 55. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE AND DELETE THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES AT RS. 2,39,64,463/ - . 2.3. IF THE CONCLUSIO N DRAWN BY THE TRIBUNAL IN THE FOREGOING PARAS/ORDERS IS KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEALS, WE FIND THAT IN ITA NO.1246/MUM/2015, THE ISSUE RELATES TO DELETING THE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENSES AND SALARY. SO FAR AS, ITA NO.1245/MUM/2015 IS CONCERNED, IDENTICAL ISSUE IS INVOLVED. LIKEWISE IN ITA NO.1244/MUM/2015, THE ISSUES ARE IDENTICAL I.E. U/S 40(A)(IA) OF THE ACT READ WITH SECTION 194C OF THE ACT. THE TRIBUNAL HAS CATEGORICALLY HELD THAT THE PROVISION, 23 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV AS C ONTAINED IN THE ASSESSMENT ORDER IS NOT ATTRACTED. THE LD. ITA NO.1244, 1245 & 1246/MUM/2015 M/S ITD ITD CEM JV & M/S ITD CEM JV 15 COMMISSIONER OF INCOME TAX (APPEAL) HAS COMMITTED NO ERROR IN THE IMPUGNED ERRORS, THEREFORE, WE FIND NO INFIRMITY IN THE SA ME. THE ORDERS OF THE LD. FIRST APPELLATE AUTHORITY ARE AFFIRMED, RESULTING INTO DISMISSAL OF APPEALS OF THE REVENUE. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED . AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND HONBLE ITAT AS MENTIONED ABOVE IN ASSESSEES OWN CASE , WE FIND THAT THE IDENTICAL ISSUE S HAVE ALREADY BEEN DECIDED BY THE HONBLE ITAT IN ASSESSEES OWN CAS E FOR AY 2010 - 11 & 2011 - 12 IN ITA 1244 & 1245/MUM/15 . T HER EFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY , WE APPLY THE SAME FINDINGS IN THE PRESENT CASE WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. RESULTANTLY, THE SE GROUNDS RAISED BY THE REVENUE STANDS DISMISSED. 24 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV G ROUND NO. 2. 6 . THIS GROUND RAISED BY THE REVENUE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE DISALLOWANCE OF PROFESSIONAL FEE/SALARY PAID OF RS. 4,17,538/ - U/S 40(BA) OF THE I.T. ACT. 7 . AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED BEFORE US THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED ON MERITS IN FAVOUR OF ASSESSEE BY THE ORDER OF THE COORDINAT E BENCH OF ITAT IN ITA NO. 4225/MUM/12 FOR AY 2008 - 09 IN ASSESSEES OWN CASE. 5. ON THE OTHER HAND, LD. DR REL IED UPON THE ORDERS PASSED BY AO . 6. WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT THE IDENTICAL GROUND 25 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF HONBLE ITAT IN ITA NO. 4225/MUM/12 FOR AY 2008 - 09 IN ASSESSEES OWN CASE. THE OPERATIVE PORTION OF THE ORDER OF HONBL E ITAT CONTAINED IN PARA NO. 2 TO 10 , WHICH IS REPRODUCED BELOW: - 2. BRIEF FACTS LEADING TO THE ISSUE FOR ADJUDICATION ARE THAT THE ASSESSEE IS AN ASSOCIATION OF PERSON, FORMED UNDER JOINT VENTURE AG REEMENT ENTERED BETWEEN ITD CEMENTATION INDIA LTD. (AN INDIAN COMPANY) AND THAI DEVELOPMENT PUBLIC COMPANY LTD. (AN ITALIAN COMPANY). THE ASSESSEE IS IN THE BUSINESS OF DEVELOPMENT OF HIGHWAY PROJECTS. THE ASSESSEE WAS UNDERTAKING THE CONSTRUCTION OF BY - PA SS ROAD ON NATIONAL HIGHWAY NO. 76 AT KOTA (RAJASTHAN) ON EAST WEST CORRIDOR AND ALSO UNDERTOOK REHABILITATION AND UPGRADING OF 35 KMS OF HIGHWAY ON NH 25 IN THE STATE OF MADHYAPRADESH. THERE WAS NO MATERIAL CHANGE IN THE BUSINESS OF ASSESSEE DURING THE RE LEVANT FINANCIAL YEAR. IN THE RETURN OF INCOME, THE ASSESSEE, INTER ALIA, CLAIMED DEDUCTION OF SALARY RELATED EXPENSES PAID TO EMPLOYEES OF ITD CEMENTATION INDIA LTD., AGGREGATING TO RS.4,99,19,593/ - . THE ASSESSEE DEDUCTED TAX AT SOURCE FROM THE ABOVE SAID PAYMENTS BY TREATING THE SAME AS CONTRACT PAYMENTS COVERED BY SEC.194C OF THE ACT. THE ARGUMENT OF THE ASSESSEE WAS THAT THESE 26 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV EXPENSES WERE INCURRED BY M/S ITD CEMENTATION LTD (MEMBER OF AOP - ASSESSEE) ON ITS BEHALF, WHICH WERE REIMBURSED BY THE ASSESSEE. ACCORDINGLY IT WAS SUBMITTED THAT THEY ARE REIMBURSEMENTS OF EXPENSES ONLY. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE U/S 192 OF THE ACT AND SINCE THE ASSESSEE HAS FAILED TO MAKE DEDUCTION UNDER SE CTION 192 OF THE ACT, THE AO DISALLOWED THE ABOVE SAID CLAIM UNDER SECTION 40(A)(IA) OF THE ACT. SINCE THE ASSESSEE HAS MADE THE PAYMENTS TO ITS MEMBER, THE AO TOOK THE VIEW THAT THE PROVISIONS OF SECTION 40(BA) OF THE ACT ARE ALSO ATTRACTED AND ACCORDINGL Y HELD THAT THIS EXPENDITURE IS DISALLOWABLE U/S 40(BA) ALSO. THE PROVISIONS OF SEC. 40(BA) STIPULATES THAT ANY PAYMENT OF SALARY OR REMUNERATION BY WHATEVER NAME CALLED, MADE BY AN ASSOCIATION OF PERSON TO A MEMBER OF SUCH ASSOCIATION SHALL NOT BE DEDUCTE D IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS. ON APPEAL FILED BEFORE THE LD. CIT(A), THE DISALLOWANCE ON BOTH COUNTS WERE SUSTAINED. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE DISALLOWANCE WAS ORDERED TO BE DELETED, VID E ORDER DATED 04.09.2014. AGGRIEVED BY THE ORDER OF TRIBUNAL, THE REVENUE FIELD APPEAL BEFORE THE HON'BLE BOMBAY HIGH COURT. THE HON'BLE HIGH COURT UPHELD THE ORDER OF 27 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV TRIBUNAL IN DELETING THE DISALLOWANCE UNDER SECTION 40(A)(IA). HOWEVER, THE HONBLE BOMB AY HIGH COURT EXPRESSED THE VIEW THAT THE TRIBUNAL HAS NOT APPROACHED THE MATTER/ISSUE, IN SO FAR AS THE APPLICABILITY OF SECTION 40(BA) OF THE ACT AND ACCORDINGLY RESTORED BACK THE SAME TO THE FILE OF THE TRIBUNAL FOR DECIDING THE SAME AFRESH ON MERITS AN D IN ACCORDANCE WITH LAW. HENCE THE ISSUE CITED ABOVE CAME BEFORE US FOR FRESH ADJUDICATION. 3. HENCE, THE ISSUE THAT REQUIRES TO BE ADJUDICATED IS WHETHER THE TAX AUTHORITIES ARE JUSTIFIED IN INVOKING THE PROVISIONS OF SEC.40(BA) OF THE ACT TO THE PAYMEN T OF SALARY AND RELATED EXPENSES OF RS.499.19 LAKHS MADE TO ONE OF ITS MEMBER M/S ITD CEMENTATION LTD (ITDCL). WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE RECORDS OF THE CASE. 4. BEFORE ADJUDICATING THIS ISSUE, WE FEEL IT PERTINENT TO DELIBERATE ON THE SCOPE OF THE PROVISIONS OF SEC.40(BA) OF THE ACT. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE PROVI SIONS OF SEC. 40(BA) OF THE ACT: - 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT 28 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION: - (A) ..... ( B)........ (BA) IN THE CASE OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS (OTHER THAN A COMPANY OR A CO - OPERATIVE SOCIETY OR A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN F ORCE IN ANY PART OF INDIA), ANY PAYMENT OF INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION, BY WHATEVER NAME CALLED, MADE BY SUCH ASSOCIATION OR BODY TO A MEMBER OF SUCH ASSOCIATION OR BODY. WE NOTICE THAT THE PROVISIONS OF SEC.40(BA) IS ATTRACTED TO THE PAYMENTS OF INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION, IF THESE PAYMENTS ARE MADE TO A MEMBER OF SUCH ASSOCIATION OR BODY. IN THE INSTANT CASE, WE ARE NOT CONCERNED WITH PAYMENT OF INTEREST OR COMMISSION. 5. THE ISSUE UNDER CONSIDERATI ON RELATED TO PAYMENT OF SALARY AND OTHER RELATED EXPENSES. THERE SHOULD NOT BE ANY DOUBT THAT THE SALARY, BONUS, REMUNERATION IS PAID FOR SERVICES RENDERED, WHICH ARE USUALLY PERSONAL IN NATURE. THERE SHOULD NOT ALSO BY ANY DOUBT THAT SUCH KIND OF SER VICES CAN BE PROVIDED ONLY BY INDIVIDUALS. HOWEVER, IN THE INSTANT CASE, THE MEMBERS OF THE 29 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV ASSESSEE - AOP ARE CORPORATE BODIES AND HENCE THE QUESTION OF PROVIDING ANY PERSONAL SERVICES BY THEM WOULD NOT ARISE. 6. THE LD A.R ALSO SUBMITTED THAT THE NATU RE OF PAYMENTS MENTIONED IN SEC. 40(BA) ARE INTEREST, SALARY, BONUS, COMMISSION AND REMUNERATION AND SUCH PAYMENTS SHOULD ACQUIRE THE CHARACTER OF INCOME IN THE HANDS OF THE RECIPIENTS ALSO. HE SUBMITTED THAT THE MEMBER OF THE ASSESSEE M/S ITDCL HAS NOT R ECEIVED ANY SALARY, WHICH IS ASSESSABLE IN ITS HANDS IN THE NATURE OF SHARE OF INCOME FROM AOP. IN THIS REGARD, HE INVITED OUR ATTENTION TO THE PROVISIONS OF SEC.67A OF THE ACT, WHICH PROVIDES METHODOLOGY OF COMPUTATION OF SHARE INCOME OF A MEMBER OF ASSOC IATION OF PERSONS. HE SUBMITTED THAT, AS PER THE PROVISIONS OF SEC.67A OF THE ACT, THE AGGREGATE AMOUNT OF INTEREST, SALARY ETC., PAID TO THE MEMBERS SHALL BE DEDUCTED FROM THE NET PROFIT AND THE REMAINING PROFIT SO ARRIVED AT SHALL BE DISTRIBUTED BETWEEN THE MEMBERS IN THE PROFIT SHARING RATIO. THERE AFTER THE INTEREST, SALARY ETC., AMOUNT SHALL BE ADDED IN THE HANDS OF RESPECTIVE MEMBER AND THE AMOUNT SO ARRIVED AT SHALL BE ASSESSED AS SHARE INCOME OF THE RESPECTIVE MEMBER. HE SUBMITTED THAT THE PROVISION S OF SEC.67A MAKE IT CLEAR THAT THE SALARY PAYMENT CONTEMPLATED IN SEC. 40(BA) IS THE PAYMENT 30 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV MADE TO THE MEMBER OF AOP, WHICH SHALL CONSTITUTE INCOME IN HIS HANDS. 7. IN THE INSTANT CASE, THE SUBMISSION OF THE ASSESSEE IS THAT THE EMPLOYEES OF ITDCL WE RE DEPUTED TO THE ASSESSEE - AOP. THE ITDCL HAS DIRECTLY PAID SALARIES AND OTHER RELATED EXPENSES TO ITS EMPLOYEES AND SINCE THE ASSESSEE HAS USED THE SERVICES OF THOSE EMPLOYEES, IT HAS RECOVERED THE SAME FROM THE ASSESSEE. HENCE IN THE HANDS OF THE ASSESSE E, WHAT WAS PAID TO M/S ITDCL WAS REIMBURSEMENT OF EXPENSES. 8. WE FIND CONSIDERABLE FORCE IN THE ARGUMENTS OF THE ASSESSEE. WE HAVE EXAMINED THE PROVISIONS OF SEC. 40(BA) OF THE ACT AND THE LD A.R ALSO INVITED OUR ATTENTION TO SEC. 67A OF THE ACT. A COMBINED READING OF BOTH THE SECTIONS WOULD MAKE IT VERY CLEAR THAT THE PAYMENTS CONTEMPLATED IN SEC. 40(BA) SHOULD CONSTITUTE SHARE INCOME FROM AOP IN THE HANDS OF THE RECIPIENT MEMBER. IN THE IN STANT CASE, THE PAYMENTS MADE BY THE ASSESSEE TO M/S ITDCL DO NOT CONSTITUTE SHARE INCOME IN THE HANDS OF M/S ITDCL, BUT IT MERELY OFFSETS THE EXPENDITURE INCURRED BY IT, I.E., THE MONEY HAS BEEN RECEIVED BY M/S ITDCL TOWARDS REIMBURSEMENT OF EXPENSES IN CURRED BY IT ON ITS EMPLOYEES ON BEHALF OF THE ASSESSEE. AT THIS STAGE, THE BENCH SPECIFICALLY ASKED LD A.R AS TO WHETHER M/S 31 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV ITDCL HAS DULY DEDUCTED TAX AT SOURCE FROM THE SALARY PAYMENTS MADE BY IT TO ITS EMPLOYEES, WHO WERE DEPUTED TO THE ASSESSEE. THE LD A.R SUBMITTED THAT M/S ITDCL HAS DULY DEDUCTED TAX AT SOURCE FROM THE SALARY PAYMENTS MADE TO ITS EMPLOYEES AND FURTHER THE ASSESSEE HAS ALSO CLARIFIED THIS ASPECT TO THE TAX AUTHORITIES. 9. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE PROVISIONS OF SEC. 40(BA) SHALL NOT APPLY TO THE PAYMENT OF RS.499.19 LAKHS GIVEN TO M/S ITDCL, SINCE THE SAID PAYMENTS HAVE NOT BEEN RECEIVED BY IT ON ITS OWN ACCOUNT CONTEMPLATED IN SEC. 67A R.W.S. 40(BA) OF THE ACT AND HENCE THE SAME SHALL NOT ACQU IRE THE CHARACTER OF SHARE INCOME FROM AOP IN ITS HANDS. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN RESPECT OF THE GROUND RESTORED TO US BY HONBLE HIGH COURT (APPLICABILITY OF SEC.40(BA) TO SALARY PAYMENTS) IS ALLOWED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND HONBLE ITAT AS MENTIONED ABOVE IN ASSESSEES OWN CASE , WE 32 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV FIND THAT THE IDENTICAL ISSUE S HAVE ALREADY BEEN DECIDED BY THE HONBLE ITAT IN ASSESSEES OWN CASE FOR AY 2008 - 09 IN ITA NO. 4225/MUM/12 . T HEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY , WE APPLY THE SAME FINDINGS IN THE PRESENT CASE WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. RESULTANTLY, THESE GROUNDS RAISED BY THE REVENUE STANDS DISMISSED. GROUND NO. 3 & 4 . 7. THESE GROUNDS RAISED BY THE REVENUE ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 8 . IN THE NET RESU LT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED WITH NO ORDER AS TO COST . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH OCT. 2018 SD/ - SD/ - ( R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 10 . 10 .201 8 SR.PS . DHANANJAY 33 I.T.A. NO. 3580 /MUM/201 7 M/S ITD ITD CEM JV / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI