2017 (4) TMI 127 - HC - Income Tax

Addition u/s 40(a)(ia) - non deduction of tds on expenses reimbursed to M/s. Prestige Holidays Resorts Pvt. Ltd - Tribunal delted addition - Held that - The tribunal found that on all these admitted facts, the Commissioner/first appellate authority reversed the finding of the assessing officer and his consequential order by relying upon a judgment in the case of Siemens Aktiongesellschaft vs. Commissioner of Income Tax (2008 (11) TMI 74 - BOMBAY HIGH COURT) and Linklaters LLP vs. Income Tax Officer (2010 (7) TMI 535 - ITAT, MUMBAI). Before that, in the detailed order, the Commissioner noted the rival contentions and stand of the parties. Once such an approach has been taken by the first appellate authority, naturally, the tribunal found that the view taken by the first appellate authority accords with even the tribunal s view. The tribunal referred to its order in a case of a Holiday Club. We do not think that merely because the tribunal did not make any reference and specifically to the two rulings/judgments of this court or the detailed finding in the Commissioner s order that it has committed any perversity or its order is vitiated by an error of law apparent on the face of the record. We do not think that the tribunal acted in any manner contrary to law.

Summary

Issues:
1. Disallowance of expenses claimed as reimbursement.
2. Addition made in relation to retention money forfeited.

Issue 1: Disallowance of expenses claimed as reimbursement:
The Revenue challenged an order by the Income Tax Appellate Tribunal disallowing a deduction claimed as reimbursement of expenses by the assessee company, which was a marketing agent appointed by the appellant. The assessing officer disallowed the reimbursement based on section 40(a)(ia) of the Income Tax Act, 1961, as tax was not deducted at the source from the reimbursed expenses. The Commissioner of Income Tax (Appeals) reversed the assessing officer's finding, relying on judgments of the High Court and the tribunal. The tribunal upheld the Commissioner's decision, finding it in line with their view and referring to a similar case involving a Holiday Club. The High Court held that the tribunal's decision was not erroneous and did not constitute any perversity or error of law, thus dismissing the appeal.

Issue 2: Addition made in relation to retention money forfeited:
The second issue involved an addition of a meager sum of &8377; 2,55,654 made by the assessing officer in relation to retention money forfeited. The High Court deemed the amount insignificant and decided not to delve into the quantum of this addition, stating it could be addressed in a more appropriate case when necessary. Consequently, the High Court found the appeal lacking in merit and dismissed it, with no order as to costs.