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TMI Blog2015 (11) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... paid the tax on the salaries received by them and hence no further tax can be collected from the assessee. The order passed under ss. 201, and 201(1A) is bad in law and the CIT(A) had also erred in confirming the same. Needless to add, since the assessee was not liable to deduct tax under s. 194J, there is no question of levying any interest also under s. 201(1A) 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 and pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for scrutiny and the assessment was completed u/s.143(3) of the Act on 27.10.2011 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 Rs. 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 argument of the assessee and invoked the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 subsidiary company, then once again deduction of tax on such salary payment would amount to double deduction of tax at source. It is apparent from the facts of the case that the assessee company is obtaining some service from its subsidiary company for which the assessee company pays service charges to its subsidiary company. Ld. A.R. submitted before us that the amount paid to the seconded employees from the assessee s subsidiary company is not the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting 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 no demand for non-deduction of tax could have been raised against the assessee. This is because the deductor will be liable only if the recipient has not paid the tax on the amount received by him. In the instant case, it is not disputed that the deputed persons, wherever liable, have paid the tax on the salaries received by them and hence no further tax can be collected from the assessee. The order passed under ss. 201, and 201(1A) is bad in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 6. In the result, the appeal of Revenue is partly allowed for statistical purposes as indicated herein above. Order pronounced on 29th September, 2015 at Chennai. <!--[if gte mso 9]> Normal 0 false false false EN-US X-NONE <![endif]--><!--[if gte mso 9]> <![endif]--><!--[if gte mso 10]> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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