2014 (3) TMI 723 - AT - Income Tax

TDS on salary to person on Deputation - Deletion made on non-deduction of tax u/s 40(a)(ia) of the act Payment made to HPCL and GAIL Held that - The payment cannot be considered as payment towards work executed by GAIL and HPCL in the course of work contract the decision in United Hotels Ltd Vs ITO 2004 (11) TMI 293 - ITAT DELHI-E followed it has been held that reimbursement of salary to the deputed personnel would not attract deduction of tax at source thus, reimbursement of expenses are not subject to tax deduction at source the order of the CIT(A) upheld Decided against Revenue.

Summary

Issues:
- Non-deduction of tax on payments made to HPCL & GAIL.

Analysis:
The appeals by the Revenue were against the orders of the CIT(A)-II for A.Ys. 2009-10 and 2010-11 regarding the deletion of the addition made for non-deduction of tax on payments to HPCL & GAIL. The primary ground raised by the Revenue was the error in deleting the addition. There was a delay in filing the appeals, which was condoned due to administrative reasons. The facts were considered identical in both appeals, focusing on the assessment year 2009-10.

During the assessment, it was found that the assessee-company incurred manpower costs on deputation employees from HPCL and GAIL. The Assessing Officer disallowed the claim of expenditure as TDS was not deducted, invoking section 40(a)(ia). The CIT(A) noted that a similar issue was previously addressed by the Tribunal for A.Ys. 2007-08 and 2008-09. The Tribunal held that the payments made by the assessee were reimbursements and not subject to TDS, following precedents and decisions supporting the assessee's case.

The Tribunal, in line with its previous decision, upheld the CIT(A)'s order for the assessment years in question, dismissing the Revenue's appeals. The Tribunal found that the issue was squarely covered by the earlier order and consistent views were maintained. The ground taken by the Revenue was therefore dismissed, leading to the dismissal of both appeals.

In conclusion, the Tribunal upheld the CIT(A)'s decision regarding the non-deduction of tax on payments to HPCL & GAIL, based on precedents and previous Tribunal decisions. The appeals by the Revenue were dismissed, affirming that the reimbursements made by the assessee were not subject to TDS under section 40(a)(ia).