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TMI Blog2012 (7) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... see - ITA No.2018/Mum/2010,ITA No.1949/Mum/2011, ITA No.1950/Mum/2011, ITA No.1951/Mum/2011 - - - Dated:- 25-5-2012 - SHRI VIJAY PAL RAO, SHRI N K BILLAIYA, JJ. Revenue by Sh M Murali ORDER PER VIJAY PAL RAO, JM The ITA No.2018/Mum/2010 and ITA No.1949/Mum/2011 are two appeals against the same order dated 30.12.2009 of the CIT(A) arising from the order passed u/s 201(1) and 201(1A) of the I T Act for the Assessment Year 2006-07. 2 It appears that the revenue has filed these two appeals against the same order in respect of the same Assessment Year i.e. 2006-06. Therefore, the appeal in ITA No.1949/Mum/2011 is treated as infructuous/nonest being a duplicate appeal of ITA No.2018/Mum/2010. Accordingly, the appeal in ITA No.1949/Mum/2011 is dismissed. 3 The other three appeals are relating to AYs 2006-07, 07-08 and 08-09 and are directed against the respective orders of the Commissioner of Income Tax(Appeals) 4 The revenue has raised common grounds in all these three appeals; therefore, the grounds raised for the aY 2006-07 are reproduced hereunder: (a) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has failed to apprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bursement to m/s Dilipkumar V Lakhi, a proprietary concern. The assessee has explained the facts before the Assessing Officer as under: i) Two companies in the group namely i) MIs. Dilipkumar V. LaKni Prop. Shri Dilipkumar V. Lakhi (Proprietary concern,) (ii) Mis. Vshinda Diamonds have effected purchases of Roughs from Diamond Trading Co. (DTC) for which they have separate purchase Invoices and confirmations from DTC; however DTC started levying a charge for valued added services (VAS) on all the purchases made after 1st July 2005 onwards and hence raised a single invoice on the principle sight holder MIs. Dilipkumar V. Lakhi as it is their policies to entertain only one name in the group; however, Shri Dilipkumar V. Lakhi paid the core service fees after deducting 15% as per article 13 of the India UK Tax Treaty. The TDS paid to the credit of Central government on 25.01.2006. In short no revenue and/or income is generated vis a vis. the reimbursement; hence TDS is not applicable nor there is any loss to the revenue as TDS has already been deducted and paid. ii) Purchases were effected by two companies and according to the ratio of their purchases; the expenses paid by Shri D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngement cannot discharge liability of TDS as per the provisions of Income tax Act. The liability of payer to make deduction of tax is absolute and any arrangement or agreement between payer and payee cannot discharge the statutory liability of the payer to deduct tax at source. Whatever the private arrangements between the payer and payee may be, the payer s liability under the statute is clear. No arrangement or agreement privately arrived at between the payer and the payee can effect or alter or modify the statutory liability of the tax payer to deduct tax at the appropriate rate from the payment made to the payee. Where a person decides to make payment or net or tax, he has himself to pay taxes which has been specifically prescribed under sec. 195A of the Income- tax Act. Further the contention of the assessee that the assessee has also obtained lower deduction certificate from the department for the period from 1st July 2005 to 31 December 2005 with an understanding that the reimbursement of fees do not attract any TDS is also not acceptable as the validity or the certificate issued under sec 197 of the Act on 28.3.2006 for Rs 44,23,570/- was in force upto 31st March 2006 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a vis the reimbursement nor there is any element of services rendered by the sister concern and it is a purely reimbursement of expenses only which is fully supported by bills/vouchers: In this connection, the Appellant relied on the various circulars issued by the C.B.D.T. and court decisions which support the contention of t., Appellant that provisions of section 194J of the Act are not applicable in respect of payments made by way of reimbursement only. The CBDT has isued guidelines regarding the applicability of the provisions of section 194J of the Act in the Circular No 715, Query No.30 dated 08-08-1995. In addition to the above, the Appellant has also relied on some of the court rulings in support of its contention that the payments made to the sister concern by way of reimbursement do not fall within the provisions of section 1 94J of the Act. The Judgments as relied on by the Appellant are mentioned hereunder 1. The decisions in the case of Clifford Chance, United Kingdom v. Dy. CIT [2002] 82 lTD 106 (Mumbai) and 2. In the case of Asstt. CIT v. Arthur Anderson Co. [2006] 5 SOT 393 (Mumbai). 7.2 Based on the above, it is amply clear that the nature of payment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 201(1A) is to be charged from the deductor. Therefore, as per finding given in respect of Ground No.1 and following the ratio of the decision of the Hon ble I.T.A.T., Jodhpur Bench cited (supra), the question of levy of interest under section 201(1A) of the Act does not arise and accordingly the Assessing Officer is directed to delete the same. 9 The facts, as emerged from the records that the original payment was made by the sister concern of the assessee to Diamond Trading Company on behalf of the assessee and subsequently the assessee has reimbursed the amount to the sister concern. Thus, once the TDS was deducted by the sister concern and deposited to the government account, then no subsequent TDS is required to be deducted on the same amount. Accordingly, we do not find any reason to interfere with the order of the Commissioner of Income Tax(Appeals) on this issue. 10 Since the payment was not subjected to TDS provisions, then the liability of interest also does not arise. Rather, in this case, there is no loss of revenue because the original payment was already subjected to tax and the amount in question is only reimbursement. 11 In view of the above discussion, we d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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