ACIT -- 10(1), MUMBAI V. INDIA INDEX SERVICES & PRODUCTS LTD, MUMBAI

ITA 5159/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71725 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 11-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 13-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SONDE
• Assessee Lawyers: O P MEENA

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI . , !'# $ % & , ' !'# !( BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER !. : 5159 / / 2012 A.Y. 2009-2010 ITA NO. : 5159/MUM/2012 (ASSESSMENT YEAR: 2009-2010) DCIT - 10(1), 455, AAYAKAR BHAVAN, 4TH FLOOR, M.K. MARG, MUMBAI -400 020 VS M/S INDIA INDEX SERVICES & PRODUCTS LTD, PLOT NO C -1, BLOCK G, EXCHANGE PLAZA, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI -400 051 .: PAN: AAACI 5633 A (APPELLANT) (RESPONDENT) APPELLANT-ASSESSEE BY : SHRI O.P. MEENA RESPONDENT-REVENUE BY : SHRI ARVIND SONDE /DATE OF HEARING : 11-11-2013 !' / DATE OF PRONOUNCEMENT : 13-11-2013 ' + O R D E R % & , !: PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE ORDER O F CIT(A) 21, MUMBAI, DATED 01.05.2012, WHEREIN THE FOLLOWING GROUN DS HAVE BEEN TAKEN: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) IN RESPECT OF SUM PAID TO THE HOLDING COMPANY AS REIMBURSEMENT TOWARDS SALARY OF DEPUTED PERSONNEL OF RS. 43,77,812/-, RS. 1,57,56,735/- AS COMMON ADVERTISEMENT EXPENSES SHARE D WITH NSEIL AND RS. 25,60,694/- A SUM PAID TO ITS HOLDING COMPANY AS REIMBUR SEMENT TOWARDS REPAIRS AND MAINTENANCE CHARGES HOLDING THAT SINCE THE ASSESSEE HAS ALREADY DEDUCTED TDS ON SUCH PAYMENT, THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE.. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON T HE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. M/S INDIA INDEX SERVICES & PRODUCTS LTD ITA NO. 5159/MUM/2012 2 2. THE EFFECTIVE GROUND PERTAINS TO DISALLOWANCE OF EXPENS ES U/S 40(A)(IA) ON ACCOUNT OF REIMBURSEMENT TOWARDS: 1. SALARY OF DEPUTED PERSONNEL AT RS. 43,77,812/- 2. SHARING OF COMMON AND AD EXPENSES WITH NSEIL RS. 1,57,5 6,735/- 3. REPAIRS & MAINTENANCE PAID TO HO AT RS. 25,60,694/- 3. ACCORDING TO THE AO, SINCE NO TDS WAS DEDUCTED, THE ABOVE AMOUNTS ARE HIT BY THE PROVISIONS OF SECTION 40(A)(IA). IN THE APPEAL, THE CIT(A) REVERSED THE FINDING OF THE AO AND DELETED THE ADDITION. 4. HENCE THE INSTANT APPEAL, AS FILED BY THE DEPARTMENT. 5. AT THE TIME OF HEARING, THE AR POINTED OUT THAT THE ISSUES HAVE BEEN IN DISPUTE IN THE PRECEDING YEARS I.E. ASSESSMENT YE ARS 2006-07, 2007-08 AND 2008-09, WHEREIN THE APPEALS WERE FILED BY TH E DEPARTMENT ON SIMILAR ISSUE AND COORDINATE BENCH OF THE I TAT IN ITAS NO. 1950/MUM/2010, 1421/MUM/2011 AND 6267/MUM/2011, HA D DISMISSED THE APPEALS FILED BY THE DEPARTMENT. 6. ON GOING THROUGH THE CONSOLIDATED ORDER OF THE COORDIN ATE BENCH OF THE ITAT, AS FILED BY THE SENIOR COUNSEL, WE FEEL IT NECES SARY TO INCORPORATE THE RELEVANT GROUNDS TAKEN IN ASSESSMENT Y EAR 2006-07, 2007-08 & 2008-09, TO GIVE A QUIETUS TO THE ISSUE COMING UP AGAIN AND AGAIN, IN THE CASE OF THE ASSESSEE. ITA NO. 1950/MUM/2010-- AY.2006-07 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE O F RS.22,08,793/- MADE U/S 40(A)(IA) OF THE ACT WITHOUT APPRECIATING THAT ASSESSEE HAS FAILED TO SUBSTANTIATE WITH DOCUMENTARY EVIDENCE TH AT THE PAYMENT MADE TO THE HOLDING COMPANIES WAS MERELY REIMBURSEM ENT WITHOUT ANY ELEMENT OF PROFIT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE OF RS.22,08,793/- MADE U/S 40(A)(IA) OF THE ACT WITHOUT APPRECIATING THAT ASSESSEE HAD FAILED TO DEDUCT TAX AS PER THE PROVISIONS OF SECTI ON(S) 194C/194J ON THE PAYMENTS MADE TO THE HOLDING COMPANY. ITA NO. 1421/MUM/2011 - AY.2007-08 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.34, 63,072/- MADE U/S.40 (A)(IA) OF THE ACT WITHOUT APPRECIATING THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE WITH DOCUMENTARY EVIDENCE TH AT THE PAYMENT MADE TO THE HOLDING COMPANIES WAS MERELY REIMBURSEM ENT OF EXPENSES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.34, 63,072/- MADE M/S INDIA INDEX SERVICES & PRODUCTS LTD ITA NO. 5159/MUM/2012 3 U/S.40(A)(IA) OF THE ACT WITHOUT APPRECIATING THAT THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE AS PER THE PROVISION S OF SECTION(S) 194C/194J ON THE PAYMENTS MADE TO THE HOLDING COMPA NIES. ITA NO. 6267/MUM/2011 - AY.2008-09 I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS . 46,48,659/- MADE BY THE AO U/ S.40(A)(IA) OF THE ACT WITHOUT APPRECI ATING THE FACT THAT UNDER THE ACT THE TAX SHOULD HAVE BEEN DEDUCTED OF THE SUM PAID BY THE ASSESSEE COMPANY TO ITS HOLDING COMPANY TOWARDS THE SERVICES OF DEPUTED PERSONNEL. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS . 1,23,09,627/- MADE BY THE AO U/S.40(A)(IA) OF THE ACT WITHOUT APPRECIA TING THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE WITH DOCUMENTAR Y EVIDENCE THAT THE PAYMENT MADE TO THE HOLDING COMPANIES TOWARDS COMMO N ADVERTISEMENT EXPENSES WAS MERELY REIMBURSEMENT OF EXPENSES. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS . 18,30,812/- MADE BY THE AO U/S. 40(A)(IA) OF THE ACT WITHOUT APPRECI ATING THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE WITH DOCUMENTAR Y EVIDENCE THAT THE PAYMENT MADE TO THE HOLDING COMPANIES TOWARDS REPAI RS AND MAINTENANCE EXPENSES WAS MERELY REIMBURSEMENT OF EX PENSES. (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 1,05,655/ - MADE BY THE AO U/S.4O(A)(IA) OF THE ACT WITHOUT APPRECIATIN G THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE WITH DOCUMENTARY EVIDENC E THAT THE PAYMENT MADE TO THE HOLDING COMPANIES TOWARDS CAR HIRE EXPE NSES WAS MERELY REIMBURSEMENT OF EXPENSES. 7. THE COORDINATE BENCH IN THE APPEALS BEFORE THEM, HELD AS UNDER: ITA NO.1950/MUM/2010 - AY.2006-07 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE-C OMPANY AND THE ASSESSMENT ORDER, HE HELD THAT PERSONNEL DEPLOYED W ITH THE APPELLANT WERE ON PAYROLLS OF THE PARENT COMPANIES, THAT ASSE SSEE HAD PAID SALARY TO THE PERSONS CONCERNED, THAT TDS WAS DULY DEDUCTED BY THE HOLDING COMPANIES, THAT PAYMENT MADE BY THE ASSESSE E COMPANY WAS REIMBURSEMENT OF EXPENSES, THAT IN CASE OF REIMBURS EMENT OF EXPENDITURE PROVISIONS OF TDS WERE NOT APPLICABLE. HE DELETED THE ADDITION MADE BY THE AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. FROM THE PAPER BOOK (PG NOS.19-43) FILED BY THE ASSESSEE FOR THE AY UNDER CONSIDERATION, IT IS EVIDENT THAT ASSE SSEE HAD FURNISHED SAMPLE COPIES OF DEBIT NOTES EVIDENCING THE REIMBUR SEMENTS. SIMILARLY, COPIES OF DEBIT NOTES, JOURNAL VOUCHERS AND WORKING OF DEPUTED PERSONNEL COSTS ON THE BASIS OF ACTUAL PERIOD OF WO RK ON SAMPLE BASIS WERE ALSO SUBMITTED DURING THE ASSESSMENT PROCEEDIN GS. THE COPIES OF MINUTES OF THE BOARD MEETING OF THE ASSESSEE-COMPAN Y HELD ON 01-02- 2005 WERE AVAILABLE WITH THE AO. IN THESE CIRCUMSTA NCES, IT CANNOT BE HELD THAT NO DOCUMENTARY EVIDENCE WAS PRODUCED BY T HE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 6. AFTER GOING THROUGH THE DOCUMENTS PRODUCED BEFORE T HE AO, WE ARE OF THE OPINION THAT THERE WAS NO FAILURE ON THE PART O F THE ASSESSEE TO SUPPORT HIS CLAIM WITH REGARD TO EXPENDITURE SHOWN UNDER THE HEAD OPERATING ADMINISTRATION AND OTHER EXPENSES. FAA HAS GIVEN A M/S INDIA INDEX SERVICES & PRODUCTS LTD ITA NO. 5159/MUM/2012 4 CATEGORICAL FINDING ABOUT PERSONNEL DEPLOYED WITH T HE ASSESSEE- COMPANY WERE ON THE PAYROLLS OF THE PARENT COMPANIE S WHO HAD PAID SALARIES TO THEM AND TDS WAS DULY DEDUCTED BY THE P ARENT COMPANIES. WE FIND THAT AO HAS NOT DISCUSSED THE ABOVE FACT IN HIS ORDER. 7. WE ARE OF THE OPINION THAT TDS PROVISIONS ARE NOT A PPLICABLE TO REIMBURSEMENT OF EXPENDITURE. IN THE MATTER OF INFO RMATION ARCHITECTS (SUPRA) HONBLE JURISDICTIONAL HIGH COURT HAS ALSO HELD THE SAME VIEW. UPHOLDING THE ORDER OF THE FAA WE DECIDE GROUND NOS . 1&2 AGAINST THE AO. . I TA NO.1421/MUM/2011 - AY.2007-08 8. GROUND NOS. 1 & 2 FOR THE AY UNDER CONSIDERATION AR E SAME AS GROUND NOS. 1 & 2 OF THE EARLIER AY. FOLLOWING THE ORDERS OF THE AY 2006-07 WE CONFIRM THE ORDER OF THE FAA AND DISMISS THE GROUND S FILED BY THE AO. 9. GROUND NO.3 OF APPEAL IS ABOUT ADMISSION OF ADDITIO NAL EVIDENCES BY THE FAA WITH REGARD TO ADVERTISEMENT EXPENSES SHARE D WITH THE NSDIL. THE FACTS OF THE CASE WERE THAT THE ASSESSEE HAD DE BITED ADVERTISEMENT EXPENSES OF RS. 80 LACES IN P & L ACCOUNT. THE SAID PAYMENT WAS MADE TO HOLDING COMPANY FOR SHARING THE ADVERTISEMENT EX PENDITURE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AO HELD THAT SAID EXPENDITURE WAS NOT ALLOWABLE AS NO EVIDENCE WAS FU RNISHED IN RESPECT OF THE ADVERTISEMENT EXPENDITURE CLAIMED IN THE P & L ACCOUNT. XXX XXX XXX XXX APPEAL FILED BY THE AO FOR AY 2007-08 STANDS DISMIS SED. ITA NO.6267/MUM/2011 - AY.2008-09 10. GROUND NO.1 OF THE APPEAL FOR THE AY UNDER CONSIDER ATION IS THE SAME AS THAT OF GROUND OF EARLIER AYS. FOLLOWING THE ORD ERS OF THE AY 2006-07 AND 2007-08, WE DECIDE THE SAID GROUND AGAINST THE AO. 11. GROUND NO.2 IS ABOUT FAILURE OF THE ASSESSEE TO SUB STANTIATE CLAIM THAT THE PAYMENT OF RS.1,23,09,627/- MADE TO THE HOLDING COMPANIES TOWARDS COMMON ADVERTISEMENT EXPENSES WAS MERELY RE IMBURSEMENT OF EXPENSES. WE FIND THAT SIMILAR ADDITION WAS MADE BY THE AO IN THE AY 2007-08 ALSO AND SAME WAS DELETED BY THE AO IN THE APPELLATE PROCEEDINGS. WHILE DECIDING THE APPEAL FILED BY THE AO FOR THE LAST AY., WE HAVE DISMISSED THE APPEAL FILED BY HIM. FOLLOWIN G THE ORDER FOR THE AY.2007-08 WE DECIDE THE ISSUE AGAINST THE AO. 12. NEXT GROUND OF APPEAL PERTAINS TO DELETION OF DISAL LOWANCE BY THE FAA; OF RS. 18,30,812/- MADE BY THE AO U/S. 40(A)(IA) OF THE ACT; IN RESPECT OF THE PAYMENT MADE TO THE HOLDING COMPANIES TOWARD S REPAIRS AND MAINTENANCE EXPENSES. WHILE FRAMING THE ASSESSMENT AO DISALLOWED THE ABOVE EXPENDITURE BY INVOKING THE PROVISIONS OF SEC.40(A)(IA)OF THE ACT. HE HELD THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE WITH REGARD TO PAYMENTS MADE TO HOLDING COMPANIES UNDER THE HEAD REPAIRS AND MAINTENANCE. IN THE APPELLATE PROCEEDINGS FAA, AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT O RDER, HELD THAT THERE WAS NO DISPUTE ABOUT SHARING OF COMMON EXPENS ES BY THE ASSESSEE WITH ITS HOLDING COMPANIES, THAT THE HOLDI NG COMPANY M/S. NESIL WAS INCURRING EXPENDITURE OF COMMON EXPENSES FOR WHICH THE APPELLANT WAS MAKING REIMBURSEMENT TO THE HOLDING C OMPANY, THAT THE TDS PROVISIONS WERE ATTRACTED, THAT THE HOLDING COM PANY HAD ALREADY DEDUCTED TDS ON SUCH EXPENSES, THAT THE DEDUCTION O F TAX BY THE APPELLANT ON SUCH PAYMENTS WOULD AMOUNT TO DOUBLE T AXATION. CONSIDERING THE FACT THAT THE TAX OF SUCH EXPENSES HAD ALREADY BEEN DEDUCTED BY THE HOLDING COMPANY, HE DELETED THE DIS ALLOWANCE MADE BY AO. BEFORE US, DR RELIED UPON THE ORDERS OF THE AO. AR SUBMITTED M/S INDIA INDEX SERVICES & PRODUCTS LTD ITA NO. 5159/MUM/2012 5 THAT HOLDING COMPANY HAD DEDUCTED TAX AS PER THE PR OVISIONS OF THE ACT, THAT PAYMENT MADE BY THE ASSESSEE WAS ONLY REIMBURS EMENT. 12.1. AFTER HEARING THE RIVAL SUBMISSIONS WE ARE OF THE O PINION THAT ORDER OF THE FAA DOES NOT SUFFER FROM ANY INFIRMITY. HE HAS RIGHTLY HELD THAT ONCE TAX WAS DEDUCTED BY THE HOLDING COMPANY, THEN THERE WAS NO JUSTIFICATION FOR AO TO HOLD THAT ASSESSEE SHOULD H AVE ALSO DEDUCTED TAX AT SOURCE FOR THE SAME PAYMENT. AO HAS NOT DOUBTED THAT EXPENDITURE INCURRED BY THE HOLDING COMPANY WAS NOT A SHARED EX PENDITURE OR THAT HOLDING COMPANY HAD NOT DEDUCTED TAX ON IT. IN THES E CIRCUMSTANCES, UPHOLDING THE ORDER OF THE FAA, WE DECIDE THE GROUN D NO.3 AGAINST THE AO. 8. SINCE, THE ISSUE, IN THE INSTANT YEAR IS TRAVELING FROM PR ECEDING YEAR WHERE THE ISSUES HAD BEEN DECIDED BY THE CO-ORDIN ATE BENCH AGAINST THE DEPARTMENT, IN THE YEAR UNDER CONSIDERATION, WE FIND NO REASON TO DEVIATE FROM THE CONSISTENT STAND TAKEN ON T HE ISSUES. EVEN THE DR ACCEPTED THE FACT THAT THE ISSUES HAD BEEN DEC IDED AGAINST THE DEPARTMENT, THOUGH, HE SUPPORTED THE ORDER OF THE AO. 9. IN THESE CIRCUMSTANCES, WE REJECT THE GROUND TAKEN BY THE DEPARTMENT. GROUNDS ARE GENERAL IN NATURE, WHICH DOES NO T INVOLVE ANY ADJUDICATION. 10. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2013. SD/- SD/- ( . ) ( % & ) !'# !'# (D. KARUNAKARA RAO) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER &&' MUMBAI, () DATE: 13 TH NOVEMBER, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) * * + ( ) - 21 , MUMBAI / THE CIT (A)-21, MUMBAI. 4) THE CIT-M.C. 10, MUMBAI, 5) -./ 0 * , * 0 , &' / THE D.R. I BENCH, MUMBAI. 6) /2 3 M/S INDIA INDEX SERVICES & PRODUCTS LTD ITA NO. 5159/MUM/2012 6 COPY TO GUARD FILE. *)4 / BY ORDER / / TRUE COPY / / [ 5 / 6 7 * 0 , &' DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *9:6 . . * CHAVAN, SR. PS