2022 (6) TMI 513 - AT - Income Tax

TDS u/s 195 - addition u/s 40(a)(i) being amounts paid to non-resident group entities which are in the nature of reimbursement of certain expenses - non admitting additional evidences in the nature of withholding tax-certificates issued by the Appellant on basis of allocation demonstrating the fact that the payments were in the nature of reimbursement and sample invoices of third party in relation to the same - first argument is that on some of the payment, assessee has already deducted tax at source and secondly, part of the expenditure is merely reimbursement of expenditure on which no tax is required to be deducted at source - HELD THAT - Despite assessee producing the evidence before the learned CIT (A), he rejected the arguments of the assessee without examining the same. As assessee has produced necessary evidence before him, the addition is confirmed only for the reason that same were not produced before the learned Assessing Officer. We find no justification has been given in rejecting the claim of the assessee. In view of this with respect to the disallowance of ₹17 lacs, we set aside the grounds of the assessee to the file of the learned Assessing Officer to examine whether assessee has already deducted tax at source on payment of ₹9,25,546/- and further, the expenditure of ₹8,71,077/- is merely reimbursement of the expenditure. The assessee is directed to produce the relevant details before the Assessing Officer. AO is directed to examine the same and decide the issue in accordance with law. Assessee Appeal is allowed for statistical purposes

Issues:
1. Disallowance of expenses under section 40(a)(1) of the Act for amounts paid to non-resident group entities.
2. Admissibility of additional evidence for withholding tax-certificates.
3. Dismissal of petition for non-levy of penalty under section 271(1)(c) of the Act.
4. Disallowance of expenses due to non-withholding of taxes to non-residents.
5. Disallowance of expenses related to employee costs and corporate recharges without tax deduction.
6. Disallowance of expenses on relocation expenses.
7. Disallowance of expenses on stock award plan reimbursements.
8. Rejection of arguments regarding tax deductions and reimbursement of expenses.

Analysis:

1. The assessee filed cross-appeals against the CIT(A)'s order for A.Y. 2015-16. The assessee raised grounds of appeal related to disallowance of expenses under section 40(a)(1) of the Act for amounts paid to non-resident group entities. The ITAT Mumbai considered the arguments presented by both parties and the evidence provided by the assessee. The ITAT upheld the CIT(A)'s decision to delete the disallowance under section 40(a)(1) for certain expenses paid to domestic group entities based on previous rulings and evidence presented.

2. The assessee also contested the rejection of additional evidence in the form of withholding tax-certificates. The ITAT directed the AO to re-examine the issue based on the evidence provided by the assessee and make a decision in accordance with the law.

3. The ITAT addressed the dismissal of the petition for non-levy of penalty under section 271(1)(c) of the Act. The ITAT did not provide specific details on this issue in the summary.

4. The ITAT reviewed the grounds of appeal raised by the Assessing Officer regarding the disallowance of expenses due to non-withholding of taxes to non-residents. The ITAT upheld the CIT(A)'s decision to delete the disallowance after considering the arguments presented by both parties and the evidence provided.

5. The ITAT examined the disallowance of expenses related to employee costs and corporate recharges without tax deduction. The ITAT reviewed the contentions of the assessee and the Assessing Officer, ultimately directing the AO to re-examine the issue and make a decision based on the evidence presented.

6. The ITAT considered the disallowance of expenses on relocation expenses. The ITAT reviewed the arguments presented by the assessee and the decision of the CIT(A) to confirm the disallowance. The ITAT set aside the grounds of the assessee for further examination by the AO based on the evidence provided.

7. The ITAT analyzed the disallowance of expenses on stock award plan reimbursements. The ITAT upheld the CIT(A)'s decision to delete the disallowance, considering the nature of the expenses as reimbursement without profit element and the evidence provided by the assessee.

8. The ITAT addressed the rejection of arguments regarding tax deductions and reimbursement of expenses. The ITAT directed the AO to re-examine the issue based on the evidence provided by the assessee and make a decision in accordance with the law.

In conclusion, the ITAT dismissed the appeal filed by the Assessing Officer and allowed the appeal filed by the assessee for statistical purposes, directing further examination by the AO on specific issues.

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