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TMI Blog2015 (9) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of tax deducted at source. However, these aspects are not clearly brought out in the orders of the Revenue. Since the Both the Revenue Authorities has not examined the following aspects and held the issue against and in favour of the assessee; i.e., whether the tax has been duly deducted at source by the assessee’s subsidiary company on the payment made by the assessee to the seconded employees from the assessee’s subsidiary company, whether the payment made by the assessee company to the seconded employees from the assessee’s subsidiary company amounts to advance payment to the assessee’s subsidiary company which is reimbursable and does not amount to additional service charges payable by the assessee company to the assessee’s subsidiary company and also the decisions cited by the assessee hereinabove, we hereby remit back the matter to the file of the Ld. Assessing Officer to consider all these aspects discussed hereinabove. - Decided in favour of revenue for statistical purposes. Disallowance of U/s.14A of the Act read with Rule 8D - Held that:- D.R could not controvert to the findings of the Ld. CIT (A) that this issue is not covered in favour of the assessee by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2010-11. Subsequently, the case was taken up for scrutiny and the assessment was completed u/s.143(3) of the Act on 15.03.2013 wherein the Ld. A.O made disallowances by invoking the provisions of Section 40(a)(ia) of the Act and Section 14A read with Rule 8D of the Rules. 4.1. Ground No.1:- Disallowance of ₹ 1,13,51,946/- being the amount paid to seconded employees on which tax is not deducted at source. During the course of scrutiny assessment proceedings, it was observed by the Ld. Assessing Officer that the assessee had not deducted tax on the remuneration paid to the seconded employees from the assessee s subsidiary company. On query by the Ld. Assessing Officer as to why tax is not deducted at source?, the assessee had explained that the remuneration paid to the seconded employees by the assessee is to be reimbursed by the assessee s subsidiary company and the assessee s subsidiary company in turn has deducted tax at source against the remuneration paid by the assessee to its seconded employees. It was therefore submitted that the assessee was not bound to deduct tax for the payment made to the seconded employees. However, the Ld. Assessing Officer rejected the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favour of the assessee by the decision of the Delhi Bench of the Tribunal in the case United Hotels Ltd Vs. ITO in ITA No.1600/Del./2001 for the assessment year 1998-99 vide order dt 11.11.2004 reported in 93 TTJ (Del) 822. The Ld. D.R on the other hand argued in support of the order of the Ld. Assessing Officer. 4.3 We have heard both the parties and carefully perused the materials available on record. The claim of the assessee is that the assessee is only making payment to its seconded employees from the assessee s subsidiary company on behalf of its subsidiary company which is to be reimbursed to the assessee company by the assessee s subsidiary company. The tax is deducted at source directly by the assessee s subsidiary company for the payment made by the assessee company to the seconded employees from the assessee s subsidiary company. It was therefore argued that the assessee is not bound to deduct tax on such advances made by the assessee company on behalf of the assessee s subsidiary company which is reimbursable. We find merit in the contention of the assessee. If tax is already deducted at source on the salary paid to the seconded employees by the assessee s subsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im is income chargeable under the head salary and therefore, it cannot be termed as fees for technical services What s. 194J envisages is that what the recipient receives must not be salary-whether professional services are rendered or whether technical services are rendered. So far as professional services are concerned, the amount must have been received in the course of carrying on the specified profession. So there is no question of deducting tax at source under S. 194J from the salary paid to an accounts executive, legal officer, etc. of the company. Likewise, amount received by a technical personnel must not be chargeable to tax under the head salaries , In the- present case, what has been paid to the deputed personnel is a salary and hence the assessee was not liable to deduct tax at source from the payment of ₹ 39,55,161 made by it to IHC as reimbursement of salaries in respect of various personnel deputed to the hotel of the assessee. The alternative contention of the counsel also has to be accepted in view of the clear provisions of the Explanation to s. 191. Assuming, without admitting, that the assessee was liable to deduct tax at source under s. 194J, still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the ground was partly allowed vide ITA No.340/10-11/A-I (New ITA 124/CIT(A)-1/2010- 11) dated 26.12.2014 with a direction tot eh A.O to rework the disallowance under limb (iii) of Rule 8D(2) and disallow the amount, if any, after reducing the investments made in subsidiary companies by relying on the decision of the Jurisdictional ITAT in the case of EIH Associated Hotels Ltd. Vs. CIT (2013-TIOL-796-ITAT-MAD A.Y 08-09 dt.17.7.2013. Since the facts and circumstances of the present assessment year being same, I hereby direct the A.O to reduce the investments made in subsidiary companies and rework disallowance under limb (iii) of Rule 8D(2). The ground is partly allowed. Before us, the Ld. D.R could not controvert to the findings of the Ld. CIT (A) that this issue is not covered in favour of the assessee by the order of the Chennai Benches of the Tribunal in the case EIH Associates Hotels Vs. CIT reported in - 2013-TIOL-796-ITAT-MAD -A. Y 2008-09 dated 17.02.2013. Moreover the Ld. A.R furnished the copy of the above mentioned order of the Tribunal wherein it was held as follows:- --- the investments made by the assessee in the subsidiary company are not on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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