MAHYCO MONSANTO BIOTECH (I) LTD, MUMBAI V. ADDL CIT RG 1(2), MUMBAI

ITA 5842/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9543 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 24-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Section: 43B; 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 5842/MUM/2012(A.Y. 2008-09) MAHYCO MONSANTO BIOTECH (INDIA) LTD. AHURA CENTRE, 5 TH FLOOR, 96, MAHAKALI CAVES ROAD, ANDHERI (EAST), MUMBAI 93. PA:AABCM 0176B (APPELLANT) VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 1(20, ROOM NO.530, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 (RESPONDENT) APPELLANT BY : SHRI KIRIT KAMDAR RESPONDENT BY : SHRI PRAVIN VARMA DATE OF HEARING : 26/11/2012 DATE OF PRONOUNCEMENT : 30 /11/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST ORDER PASSED BY LD. CIT(A)-2, MUMBAI DATED 18/07/2012 FOR THE ASSESSMENT YEAR 2008-09. THE GROUNDS OF APPEAL RAISED BY THE ASSES SEE READ AS UNDER: BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, MAHYCO MONSANTO BIOTECH (INDIA) LTD (APPELLANT) CRAVES LEAVE TO PREFER AN APPEAL AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) - 2 [CIT(A)] UNDER SECTION 250 OF THE INCOME-TAX ACT, 1961 (THE ACT) IN RESP ECT OF THE ORDER PASSED BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX -1(2), MUMBAI (AO) UNDER SECTION 143(3) OF THE ACT, ON THE FOLLOWING GROUNDS: GROUND 1: DISALLOWANCE UNDER SECTION 40(A)(IA) OF T HE ACT FOR REIMBURSEMENT OF EXPENSES RS 8,37,22,826/- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSING OFFICER IN DISALLOWING EXPENSES REIMBURSED TO GROUP COMPANIES UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURC E. ITA NO. 5842/MUM/2012(A.Y. 2008-09) 2 WITHOUT PREJUDICE TO GROUND-1, THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE BENEFIT OF SECOND PROVISO INSERTED TO SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT 2012 CANNOT BE GIVEN FOR AY 2008-09 SINCE AMENDMENT IS PROSPECTIVE IN NATURE. GROUND 2: DISALLOWANCE UNDER SECTION 43B OF RS 37,9 4,5761- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSING OFFICER IN DISALLOWING UNDER SECTION 43B OF THE ACT, EXPENSES AMOUNTING TO RS 37,94,576/- GROUPED UNDER THE HEAD MISCELLANEOUS EXPENSES ON TH E GROUND THAT SAME REPRESENTS INTEREST ON DELAYED PAYMENT OF VAT. THE APPELLANT CRAVES, TO CONSIDER EACH OF THE ABOVE GROUNDS OF APPEAL WITHOUT PREJUDICE TO EACH OTHER AND CRAVES LEAVE TO ADD, AL TER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2. IN GROUND NO.1, THE ASSESSEE IS AGITATING AN AD DITION OF RS. 8,37,22,826/-. IT IS THE CASE OF THE AO THAT THE PAYMENTS DETAILED BE LOW BEING REIMBURSEMENT TO THE GROUP COMPANIES ARE LAIABLE FOR DEDUCTION TO TAX U NDER SECTION 194C OF THE INCOME TAX ACT, 1961 (THE ACT). A) MONSANTO HOLDINGS PVT. LTD. RS. 69,06,923/- B) MAHYCO SEEDS LTD. RS. 86,31,442/- C) MAHARASHTRA HYDBRID SEEDS LTD. RS. 10,21,491/- D) MONSANTO INDIA LTD. RS. 7,57,84,760/- --------------------- - TOTAL RS. 9,23,44,716/- ============== 2.1 FOR NOT DEDUCTING TAX AT SOURCE AND DEPOSITING THE SAME WITH THE GOVERNMENT LD. A.O HAS ADDED A SUM OF RS. 8,37,22,826/- UNDER SECTION 40(A)(IA) OF THE ACT. IT MAY BE MENTIONED HERE THAT FOR CONTENDING THAT FOR REIMBURSEMENT TDS IS NOT DEDUCTIBLE, THEREFORE, DISALLOWANCE CANNOT BE MADE UNDER SECTION 40(A)(IA) OF THE ACT, THE ASSESSEE HAS RELIED UPON THE FOLLOWING DECISIO NS WHICH MENTIONED IN THE ASSESSMENT ORDER: (A) THE DECISION OF HONBLE ITAT IN THE CASE OF AC IT VS. J.B.BODA SURVEYORS PVT. LTD., ITA NO.4252/MUM/2009 DATED 21/5/2010. (B) CIT VS. SIEMENS AKTIONGESELLCHAFT , 310 ITR 320 (BOM) ITA NO. 5842/MUM/2012(A.Y. 2008-09) 3 2.3 HOWEVER, LD. AO HAS DISTINGUISHED THE AFOREMEN TIONED DECISIONS ON THE GROUND THAT HONBLE BOMBAY HIGH COURT DID NOT CONSI DER THE ISSUE REGARDING DISALLOWANCE UNDER SECTION 40(A)(IA), BUT THE ISSUE WAS IN RESPECT OF ROYALTY. LD. CIT(A) HAS UPHELD THE ACTION OF AO. THE ASSESSEE IS AGGR IEVED, HENCE, IN APPEAL. 3. IT MAY ALSO BE MENTIONED HERE THAT AO DID NOT D ISPUTE THE FACT THAT THE AFOREMENTIONED AMOUNTS ARE IN THE NATURE OF REIMBUR SEMENT AS AO HIMSELF HAS NOTED IN THE ASSESSMENT ORDER IN PARA 3.1 THAT THESE PAYM ENTS ARE IN THE NATURE OF REIMBURSEMENT. THE AO HAS EXCLUDED A SUM OF RS.86 ,21,890/- PAID BY IT TO M/S. MAHYCO SEEDS LTD. AS THE TDS WAS DEDUCTED ON THE SA ID AMOUNT AND THE BALANCE AMOUNT OF RS.8,37,22,826/- WAS DISALLOWED OUT OF AF OREMENTIONED AMOUNT OF RS.9,23,44,716/-. 4. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY L D. A.R THAT AO HIMSELF HAS ACCEPTED THAT THESE PAYMENTS ARE IN THE NATURE OF R EIMBURSEMENT AND IF IT IS SO, DISALLOWANCE UNDER SECTION 40(A)(IA) NOT TO BE MAD E RELYING UPON AFOREMENTIONED TWO DECISION. HE SUBMITTED THAT AO HAS WRONGLY DISTING UISHED THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SIEMENS AKTIONGESELLCHAFT(SUPRA) ON THE GROUND THAT THE SAID DECISION WAS RENDERED ON ROYALTY. HE SUBMITTED THAT IT HAS CLEARLY BEEN HELD BY JURISDICTIONAL HIGH COURT THA T REIMBURSEMENT OF EXPENSES CAN, UNDER NO CIRCUMSTANCES BE REGARDED AS REVENUE RECEI PT. HE SUBMITTED THAT WHEN THESE ARE NOT IN THE NATURE OF REVENUE RECEIPTS, TD S PROVISION WILL NOT BE APPLICABLE AND THIS WAS SO HELD BY THE MUMBAI TRIBUNAL IN TH E CASE OF ACIT VS. J.B.BODA SURVEYORS PVT. LTD.(SUPRA) AND HE REFERRED TO THE F OLLOWING OBSERVATIONS FROM THE SAID DECISION: 2. FOR THE SAKE OF BREVITY THE BRIEF FACTS OF THE CASE EXTRACTED FROM ITA NO.4252/MUM/2009 IN M/S. J.B. BODA SURVEYORS PVT. LTD. FOR THE ASS ESSMENT YEAR 2006-07 ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BU SINESS OF MARINE CARGO SURVEYORS, SAMPLERS, ANALYSTS AND LO SS ASSESSORS. THE RETURN WAS FILED DECLARING TOTAL INCOME AT RS. 2,7 8,71,388/-. DURING THE COURSE OF ASSESSMENT IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED REIMBURSEMENT EXPENSES RS.12,92,46,536/- UN DER THE HEAD MANAGEMENT/ADMINISTRATIVE EXPENSES TO M/S. J.B. BOD A & CO. PVT. LTD. SINCE THE ASSESSEE HAS NOT DEDUCTED TDS, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID REIMBURSEMENT EXPENSES MAY NOT BE DISA LLOWED BECAUSE THE CLAIM IS HIT BY THE PROVISION OF SECTION 40(A) OF THE INC OME TAX ACT, 1961(THE ACT). IN ITA NO. 5842/MUM/2012(A.Y. 2008-09) 4 RESPONSE IT WAS INTERALIA SUBMITTED BY THE ASSESSE E THAT AS PER ARRANGEMENT THE PARENT COMPANY M/S. J.B. BODA & CO. IS INCURRING AL L THE EXPENSES AND THEN RECOVERS IT FROM THE RESPECTIVE COMPANIES AND IT IS A CASE OF REIMBURSEMENT OF EXPENSES HENCE, NOT LIABLE TO DEDUCTION OF TDS. THE ASSESSING OFFICER AFTER CONSIDERING ASSESSEE'S EXPLANATION WAS OF THE VIEW THAT THE EXPENSES CLAIMED AS REIMBURSEMENT (OTHER THAN THE SALARY, PF AND PROFES SIONAL FEES ON WHICH THE TDS HAS BEEN DEDUCTED BY THE PARENT COMPANY) OF RS.3,3 5,73,125/- ON ACCOUNT OF STAFF WELFARE EXPENSES, RENT, GENERAL EXPENSES, ELE CTRICAL AND GAS CHARGES, CONVEYANCE EXPENSES AND CAR HIRE CHARGES, MOTOR CAR EXPENSES ETC. ON WHICH TDS HAS NOT BEEN DEDUCTED ARE NOT ALLOWABLE AS PER PROV ISION OF SECTION 40(A) OF THE ACT AND ACCORDINGLY THE ASSESSING OFFICER AFTER ADD ING THE SAME TO THE INCOME OF THE ASSESSEE COMPLETED THE ASSESSMENT AT AN INCOME OF RS.6,14,44,510/- VIDE ORDER DATED 31.12.2008 PASSED U/S.143(3) OF THE ACT . ON APPEAL, BEFORE THE LD. CIT(A) THE ASSESSEE INTERALIA SUBMITTED THAT THE AS SESSEE COMPANY IS NOT LIABLE TO DEDUCT ANY TDS ON SUCH REIMBURSEMENT OF EXPENSES DU E TO THE FACT THAT AS PER THE ARRANGEMENT WITH M/S. J.B. BODA & CO. PVT. LTD. , THE PARENT COMPANY OF J.B. BODA GROUP OF COMPANIES, INCURS ALL MANAGEMENT, ADM INISTRATIVE EXPENSES ON BEHALF OF ALL GROUP COMPANIES WHO SHARE THE COMMON FACILITIES AND THEN RECOVERS IT FROM THE RESPECTIVE PARTICIPANTS ON ACTUAL BASIS AS FAR AS POSSIBLE. IT WAS FURTHER SUBMITTED THAT M/S. J.B. BODA & CO. PVT. LT D. WHICH IS ACTUALLY MAKING THE PAYMENTS FOR THE EXPENDITURE HAS BEEN DEDUCTING TAX AT SOURCE AND HENCE, COMPLIES WITH THE PROVISIONS OF DEDUCTING TAX AT S OURCE. IT WAS FURTHER SUBMITTED THAT IF THE DEDUCTION IS MADE BY THE ASSESSEE THEN IT WOULD AMOUNT TO DOUBLE DEDUCTION. THE RELIANCE WAS ALSO PLACED ON (I) ACIT VS. MODICON NETWORKS P. LTD. 14 SOT 204 (DEL.); (II) DECTA, IN RE 237 ITR 190 (A AR) AND (III) SEDCO FOREX INTERNATIONAL DRILLING INC. VS. DCIT 72 ITD 204(DEL .). THE LD. CIT(A) WHILE OBSERVING THAT THE EXPENSES REIMBURSED BY THE GROUP COMPANY TO THE FLAGSHIP COMPANY DOES NOT CONSTITUTE INCOME IN THE HANDS OF THE LATER AND DOES NOT PARTAKE THE NATURE OF COMMISSION, HELD THAT THERE I S NO LIABILITY TO DEDUCT TAX ON PART OF THE APPELLANT COMPANY AND ACCORDINGLY DELET ED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER . 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING EFFECTIVE GROUNDS OF APP EAL:- A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DELETING THE DI SALLOWANCE OF RS.3,35,73,125/- BEING PAYMENTS MADE TO PARENT COMPANY M/S. J.B. BODA & CO. PVT. LTD. AS COMMISSIO N FOR PROVIDING COMMON FACILITIES, ON WHICH TDS WAS NOT D EDUCTED AS PER PROVISIONS OF SECTION 40(A)OF THE ACT. B. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) FAILED TO APPRECIATE THA T REIMBURSEMENT OF EXPENSES IS NOT EXEMPT FROM TDS PROVISIONS. 4. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT F OR THE REASONS AS DISCUSSED IN THE ASSESSMENT ORDER, THE LD. CIT(A) WAS NOT JUS TIFIED IN DELETING THE ITA NO. 5842/MUM/2012(A.Y. 2008-09) 5 DISALLOWANCE MADE BY THE ASSESSING OFFICER. HE THER EFORE, SUBMITS THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BE RESTO RED. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE WHILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT THIS ISSUE STA NDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ACIT VS. M/S. CROWE BODA & CO. PVT. LTD. IN ITA NO.4251/M/2009 FOR ASSESSMENT YEAR 2006 -07 ORDER DATED 30.3.2010. SHE ALSO PLACED ON RECORD THE COPY OF T HE SAID ORDER OF THE TRIBUNAL. SHE THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS THE PAYMENT WAS MADE TO PARENT COMPANY M/S. J.B. BODA & CO. PVT. LTD. AS PAYMENT OF REIMBURSEMENT EXPENSES ON T HE BASIS OF COST SHARING ARRANGEMENT. THIS ARRANGEMENT WAS ENTERED INTO FOR MORE EFFECTIVE COST MANAGEMENT. THE COMMON EXPENSES ARE INCURRED FOR AN D ON BEHALF OF EVERYONE IN THE GROUP. ALL THE GROUP COMPANIES REIMBURSED THE EXPENSES TO M/S. J.B. BODA & CO. PVT. LTD. ON AN EQUITABLE BASIS DETERMINED IN E ARLIER YEARS BY THE MANAGEMENT CONSULTANT. THERE IS NO MATERIAL ON RECO RD TO SHOW THAT THE ASSESSEE HAS MADE PAYMENTS TO THE CONTRACTOR OR SUB-CONTRACT OR OR ACTUAL SERVICE PROVIDER. THEREFORE, THE PAYMENTS MADE TO M/S. J.B. BODA & CO . PVT. LTD. DO NOT FALL WITHIN THE PURVIEW OF SECTION 40(A)(IA) OF THE ACT. IN M/S. CROWE BODA & COMPANY (SUPRA), IT HAS BEEN HELD BY THE TRIBUNAL VIDE PAR A-6 OF ITS ORDER DATED 30.3.2010 AS UNDER :- 6. ON PLAIN READING OF ABOVE SECTION, WE FIND THAT ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY FE ES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR S UB- CONTRACTOR BEING RESIDENT FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN P AID WITHIN STIPULATED PERIOD. IN THE CASE UNDER CONSI DERATION, THE ASSESSING OFFICER DID NOT SPECIFICALLY POINT OU T AS TO UNDER WHICH CLAUSE OR UNDER WHICH SUB-SECTION OF SE CTION 40 THE CLAIM OF THE ASSESSEE WAS DISALLOWED. THE CON TENTION OF THE ASSESSEE IS THAT THE PAYMENT MADE TO PARENT COM PANY, M/S. J.B. BODA & CO. PVT. LTD. IS PAYMENT OF REIMBU RSEMENT OF EXPENSES AND NOT AGAINST CARRYING OUT ANY CONTRA CT WORK AS A CONTRACTOR OR SUB-CONTRACTOR, ON WHICH, TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B OF THE ACT. THE ASS ESSEE HAS ESTABLISHED THAT THE PAYMENT TO THEIR PARENT COMPAN Y M/S. J.B. BODA & CO. PVT. LTD. WAS NOT SUBJECT TO TDS AS PAYMENTS WERE NOT MADE AGAINST ANY CONTRACT WORK CA RRIED OUT. IT IS AN ADMITTED FACT IN THE CASE CONSIDERAT ION THAT THE PAYMENT MADE TO PARENT COMPANY, M/S. J.B. BODA & CO . PVT. LTD. IS A PAYMENT OF REIMBURSEMENT OF EXPENSES. I N CASE OF REIMBURSEMENT OF EXPENSES, THE EXPENDITURE INCURRED IS RELATED TO THE PERSON WHO WAS NOT MADE THE ORIGINAL ITA NO. 5842/MUM/2012(A.Y. 2008-09) 6 PAYMENT. IN OTHER WORDS, THE PAYMENT OF EXPENDITUR E IS MADE BY X-PARTY ON BEHALF OF THE Y-PARTY AND LATER ON THE SAME IS REIMBURSED TO THE X-PARTY, BY Y-PARTY, THE EXPENDITURE IS PERTAINING TO Y-PARTY AND NOT PERTAI NING TO X- PARTY. THUS, THE PAYMENT TO M/S. J.B. BODA & CO. MADE BY THE ASSESSEE IS A SIMPLE REIMBURSEMENT. IN THE CASE UNDER CONSIDERATION, THE PARENT COMPANY M/S.J.B. BODA & C O. PVT. LTD. HAS ACTED MERELY THE ROLE OF AGENT FOR MAKING PAYMENT OF EXPENDITURE ON BEHALF OF THE ASSESSEE AND GETTIN G REIMBURSEMENT. THEREFORE, THE PAYMENT MADE TO M/S . J.B. BODA & CO. PVT. LTD. IS NOT ON ACCOUNT OF ANY EXPEN DITURE. SECTION 40(A)(IA) APPLICABLE ONLY IN A CASE OF EXPE NDITURE. THE SAID SECTION CLEARLY PROVIDES THAT CERTAIN SPEC IFIC EXPENDITURE WHICH IS SUBJECT TO TDS IS NOT ALLOWAB LE IF THE ASSESSEE FAILED TO MAKE TDS OR AFTER MAKING DEDUCTI ON OF TDS DOES NOT PAY WITHIN THE STIPULATED PERIOD. AS STATED ABOVE, THE PAYMENT MADE TO M/S. J.B. BODA & CO. PVT . LTD. IS ON ACCOUNT OF PERSONAL ACCOUNT IN THE TERMS OF A CCOUNTING PRINCIPLE PAYING AND THEN RECEIVING AMOUNT WHICH IS NOT AN EXPENDITURE IN THE HANDS OF THE ASSESSEE, THEREFORE , THE ASSESSING OFFICER IS NOT CORRECT IN INVOKING SECTIO N 40(A)(IA) OR OTHER PROVISION OF SECTION 40 OF THE ACT. IT IS A LSO TO BE NOTED HERE THAT THERE IS NO EVIDENCE OR MATERIAL ON RECOR D BASED ON WHICH IT CAN BE SAID THAT PAYMENT MADE TO M/S. J.B. BODA & CO. PVT. LTD. IS SUBJECT TO TAX DEDUCTED AT SOURCE UNDER CHAPTER XVII-B OF THE ACT. WHETHER THE REVENUE H AS TAKEN ANY PROCEEDINGS FOR DEFAULT OF NOT MAKING TDS UNDER CHAPTER XVIIB OF THE ACT AGAINST THE ASSESSEE IS AL SO NOT ON RECORD. IN ADDITION TO ABOVE IT HAS ALSO NOTICED T HAT THE ASSESSING OFFICER DID NOT DISALLOW SUCH CLAIM OF TH E ASSESSEE IN THE SUBSEQUENT YEAR FOR ASSESSMENT YEAR 2007-08 EVEN AFTER RAISING QUERY IN THIS REGARDS. IN THE LIGHT OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF CIT(A) IN DELETING THE DISALLOWANCE OF RS.29,58,608/- ON A CCOUNT OF REIMBURSEMENT MADE TO PARENT COMPANY M/S. J.B. BODA & CO. PVT. LTD. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE REVENUE, WE FOR THE REASONS AS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL HOLD THAT THE ASSESSEE IS NOT LIABLE TO DE DUCT TDS ON THE REIMBURSEMENT OF EXPENSES AND ACCORDINGLY WE ARE INCLINED TO UPHO LD THE FINDING OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER . THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE, REJECTED. 4.1 THUS IT WAS PLEADED BY LD. A.R THAT THE ISSUE I S COVERED BY AFOREMENTIONED DECISION. HE SUBMITTED THAT NOTING THIS FACT IT WA S OBSERVED BY THE ITAT IN THE STAY ITA NO. 5842/MUM/2012(A.Y. 2008-09) 7 ORDER THAT PRIMA FACIE THE CASE IS IN FAVOUR OF A SSESSEE. THUS IT WAS PLEADED BY LD. A.R THAT ADDITION SHOULD BE DELETED. 5. ON THE OTHER HAND, LD. D.R RELIED UPON THE ORDE R PASSED BY THE AO AS WELL AS LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. WE HAVE CAREFULLY GONE THROUGH T HE ASSESSMENT ORDER. THE AO DID NOT DISPUTE THE FACT THAT THE IMPUGNED AMOUNT WAS I N THE NATURE OF REIMBURSEMENT EXPENSES ON COST TO COST BASIS. IF IT IS SO, ACCO RDING TO THE 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 DISALLOWAN CE CANNOT BE MADE AS IT HAS NOT BEEN SHOWN OR ESTABLISHED THAT AFOREMENTIONED PAYMENTS WERE MADE BY THE ASSESSEE TO THE AFOREMENTIONED GROUP CONCERNS AGAINST ANY CONTR ACT WORK CARRIED OUT BY THEM FOR THE ASSESSEE. IN THE CASE OF REIMBURSEMENT OF EXP ENSES, 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 BEHALF OF Y P ARTY AND LATER ON THE SAME IS REIMBURSED TO X PARTY BY Y PARTY, THE EXPENDIT URE IS PERTAINING TO Y PARTY AND NOT PERTAINING TO X PARTY. THEREFORE, APPLYING T HE RATIO LAID DOWN IN THE CASE OF ACIT VS. CROWE BODA & CO. PVT. LTD. IN ITA NO.4251/M/200 9 VIDE ORDER DATED 30/3/2010, RELIED UPON IN THE CASE OF ACIT VS. J.B.BODA SURVE YORS PVT. LTD., THE ISSUE IS DECIDED IN FAVOUR OF ASSESSEE. THE RELEVANT OBSERVATIONS H AVE ALREADY BEEN REPRODUCED ABOVE. IN VIEW OF THE ABOVE DISCUSSION, GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 7. SO FAR AS IT RELATES TO GROUND .2, INITIALLY TH E ASSESSEE SHOWED THE FOLLOWING AMOUNT OF RS.37,94,576/- IN THE MISCELLANEOUS EXPEN SES AS PROVISION FOR INTEREST ON VAT. 1. PRF EXPENSES RS. 1021491/- 2. FIELD STAFF EXPENSES RS. 1586491/- 3. OTHER GENERAL EXPENSES (5000 TO 10000/-) RS. 1186594/- TOTAL : RS. 3794576/- ============= HOWEVER, LATER ON FINDING THAT THE NARRATION WAS G IVEN BY MISTAKE THE ITEMS WERE RE- DESCRIBED AS UNDER: ITA NO. 5842/MUM/2012(A.Y. 2008-09) 8 1. EGI PRODUCTION COST REIMBURSEMENT RS. 275195/- 2. MIL COST TRANSFERRED RS. 121240/- 3. FIELD STAFF EXPENSES RS. 1586491/- 4. OTHER GENERAL EXPENSES (5000 TO 10000) RS. 1811650/- TOTAL : RS. 3794576/- ============ 7.1 THE AO REJECTING THE CLAIM OF THE ASSESSEE AND DISALLOWED THE AFOREMENTIONED AMOUNT UNDER SECTION 43B OF THE ACT. 7.2 THE LD. CIT(A) HAS UPHELD THE AFOREMENTIONED AD DITION ON THE GROUND THAT EVEN IN THE ASSESSMENT PROCEEDINGS / REMAND PROCEEDINGS THE ASSESSEE DID NOT SUBMIT COMPLETE VOUCHERS OF EXPENSES FOR VERIFICATION BY THE AO AS ONLY COPY OF LEDGER ACCOUNT AND SOME SAMPLE VOUCHERS WERE PRODUCED FOR VERIFICATION. 8. IT IS THE CASE OF LD. AR THAT SAMPLE VOUCHERS WERE FILED ONLY BY WAY OF EXAMPLE AND AO NEVER REQUIRED THE ASSESSEE TO FILE ALL VOUCHERS. HE SUBMITTED THAT ASSESSEE IS IN A POSITION TO SUBMIT ALL VOUCHERS AN D THE MATTER MAY BE RESTORED BACK TO THE FILE OF AO FOR VERIFICATION. 9. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF AO AND LD. CIT(A). 10. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE INTEREST OF JUSTICE WE RESTORE THIS ISSUE TO THE FILE OF AO WITH A DIRECTION TO GI VE AN OPPORTUNITY TO THE ASSESSEE TO SUBMIT ALL THE VOUCHERS. AFTER VERIFYING THE SAME AO WILL RE-ADJUDICATE THE ISSUE REGARDING DISALLOWANCE OF IMPUGNED AMOUNT IN ACCORD ANCE WITH LAW. WE DIRECT ACCORDINGLY. FOR STATISTICAL PURPOSES GROUND NO.2 IS ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF NOV. 2012 SD/- SD/- (SANJAY ARORA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH NOV. 2012 ITA NO. 5842/MUM/2012(A.Y. 2008-09) 9 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R B BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.