9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (6) TMI 69 - AT - Income TaxTDS u/s 195/192 - disallowing the assessee s payment made to its overseas group entities towards reimbursement of costs other than salary related to relocation of its secondment employees - CIT(A)-NFAC also treated the nature of payment as a reimbursement of salary cost paid to such group entities and therefore, he also under wrong notion noted that these payments are salary cost liable to TDS - HELD THAT - The need to deduct taxes on the said contributions does not arise - payment in the nature of relocation expenses being payment where SCB UK centrally enters contracts with all the vendors and pays vendor costs directly. SCB UK also bears the cost of relocation of the expatriates/employees to India. The expenses incurred were in the nature of payment for airfare, packers and movers engaged to aid in the movement of expatriates and their family to India. Since the expenses were purely of internal business in nature, no taxes are required to be deducted on the same. Such receipt is not liable to tax in the hands of the employees since it was not an income that accrued to them for services rendered. The payment made to SCB entities are pure reimbursements and hence, not taxable. We noted that neither the AO nor the CIT(A)-NFAC has verified these payments and just simpliciter in mistaken notion considered these payments as salary to secondment employees. On principle, these being purely reimbursement and there is no mark up on these payments, no TDS is required to be deducted because these are not income in the hands of the assessee. But for limited purpose of verification, whether these are purely payment in the nature of contribution to retirement and pension scheme and relocation expenses, the AO will verify the vouchers and accordingly, allow the claim of assessee. In term of the above, this issue is remitted back to the file of the AO for limited purpose verification and allowed for statistical purpose. Non-Credit of Dividend Distribution Tax (DDT) Paid u/s 115O - HELD THAT - We have heard rival contentions and gone through facts and circumstances of the case. We have heard ld. Senior DR and ld.AR. We noted that we have no details and mechanism for verification and hence, we direct the AO to verify the amount duly remitted within the prescribed timelines u/s. 115O of the Act and claim of assessee that it has paid DDT to the tune of Rs. 28.1 crores and accordingly, after verification allow the claim of assessee as per law. This issue is also remitted back to the file of the AO. DDT liability of the Appellant u/s 115-O - dividends declared/paid by it during the Impugned AY to Standard Chartered Bank, PLC, a tax resident of the UK, shall be restricted to the applicable rate of tax on dividends prescribed under Article 11 of the India-UK DTAA - HELD THAT - We noted that this issue of DDT liability of the assessee u/s.115O of the Act in regard to dividend declared/paid by it during the relevant assessment year is to be adjudicated by lower authorities. We have gone through the assessment order and the order of CIT(A)-NFAC and find that this issue has not been adjudicated at all. Hence, we remit this issue to the file of the AO, who will decide this issue denovo after allowing reasonable opportunity of being heard to the assessee. Accordingly, the appeal filed by the assessee is allowed for statistical purposes, as directed above. Nature of expenses - Lease rental payments being financial lease and allowance of depreciation - HELD THAT - AR stated that AS-19 are for accounting of the company but for income-tax purposes, the assessee has computed the income and relevant computation is enclosed at page 196 of paper-book wherein the disallowable expenses or depreciation are disallowed and allowed expenses are claimed as allowable including lease rentals and depreciation. AR stated that the entire depreciation charge as per the books of account is disallowed u/s. 32 of the Act while determining the taxable income. Thus, the depreciation on assets taken on finance lease form part of this disallowance. The assets taken on finance lease are not capitalized in the block of asset dealing with motor cars. The principal component of lease rentals amounting is claimed as deduction while computing taxable income. The interest component is not separately claimed as deduction as the same is duly considered while arriving at the 'profit before tax' figure on the basis of which the income tax computation is prepared. The confusion created by the AO in regard to lease rental is explained as above. We noted that the facts of the case are crystal clear and assessee is eligible for claim of deduction in regard to depreciation on assets. Hence, we confirm the order of the CIT(A)-NFAC and accordingly, this issue of Revenue s appeal is dismissed.
Issues Involved:
1. Disallowance of reimbursement of costs related to relocation of seconded employees without deduction of TDS u/s 195. 2. Non-credit of Dividend Distribution Tax (DDT) paid u/s 115O. 3. DDT liability under section 115O in respect of dividends declared/paid to a tax resident of the UK. 4. Allowance of lease rental payments and depreciation in financial lease transactions. Summary: Issue 1: Disallowance of Reimbursement of Costs Related to Relocation of Seconded Employees Without Deduction of TDS u/s 195 The first issue pertains to the disallowance of the assessee's payment of INR 2.59 Crores to its overseas group entities towards reimbursement of costs related to the relocation of its seconded employees without deduction of TDS u/s 195, invoking section 40(a)(i). The AO and CIT(A)-NFAC treated these payments as salary costs liable to TDS u/s 192. The Tribunal noted that the payments were purely reimbursements and not income in the hands of the assessee. The Tribunal remitted the issue back to the AO for verification of the nature of the payments and allowed the claim for statistical purposes. Issue 2: Non-Credit of Dividend Distribution Tax (DDT) Paid u/s 115O The second issue involves the non-credit of DDT paid to the extent of INR 28.1 Crores u/s 115O. The Tribunal directed the AO to verify the amount remitted within the prescribed timelines and allow the claim as per law. This issue was also remitted back to the AO for verification. Issue 3: DDT Liability Under Section 115O in Respect of Dividends Declared/Paid to a Tax Resident of the UK The third issue concerns the DDT liability of the assessee u/s 115O in respect of dividends declared/paid to Standard Chartered Bank, PLC, a tax resident of the UK. The Tribunal noted that this issue was not adjudicated by the lower authorities and remitted it back to the AO for a fresh decision after allowing a reasonable opportunity of being heard to the assessee. Issue 4: Allowance of Lease Rental Payments and Depreciation in Financial Lease Transactions The fourth issue in the Revenue's appeal pertains to the allowance of lease rental payments being financial lease and the allowance of depreciation. The AO disallowed the claim of deduction of INR 1,63,01,535/- on account of lease rental considered as revenue expenditure, treating it as a financial lease. The CIT(A)-NFAC allowed the claim of the assessee, relying on departmental circulars and court rulings. The Tribunal confirmed the order of the CIT(A)-NFAC, stating that the assessee is eligible for the claim of deduction in regard to depreciation on assets and dismissed the Revenue's appeal. Conclusion: The appeal filed by the assessee was allowed for statistical purposes, and the appeal filed by the Revenue was dismissed.
|
