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TMI Blog2010 (5) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... and on behalf of everyone in the group. All the group companies reimbursed the expenses to M/s. J.B. Boda Co. Pvt. Ltd. on an equitable basis determined in earlier years by the management consultant. There is no material on record to show that the assessee has made payments to the contractor or sub-contractor or actual service provider. Therefore, the payments made to M/s. J.B. Boda Co. Pvt. Ltd. do not fall within the purview of section 40(a)(ia). In the absence of any distinguishing feature brought on record by the revenue, we hold that the assessee is not liable to deduct TDS on the reimbursement of expenses and accordingly we are inclined to uphold the finding of the ld. CIT(A) in deleting the disallowance made by the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Management/Administrative expenses to M/s. J.B. Boda Co. Pvt. Ltd. Since the assessee has not deducted TDS, the assessee was asked to explain as to why the said reimbursement expenses may not be disallowed because the claim is hit by the provision of section 40(a) of the Income tax Act, 1961(the Act). In response it was interalia submitted by the assessee that as per arrangement the parent company M/s. J.B. Boda Co. is incurring all the expenses and then recovers it from the respective companies and it is a case of reimbursement of expenses hence, not liable to deduction of TDS. The Assessing Officer after considering assessee's explanation was of the view that the expenses claimed as reimbursement (other than the salary, PF and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 190 (AAR) and (iii) SEDCO Forex International Drilling Inc. vs. DCIT 72 ITD 204(Del.). The ld. CIT(A) while observing that the expenses reimbursed by the group company to the flagship company does not constitute income in the hands of the later and does not partake the nature of commission, held that there is no liability to deduct tax on part of the appellant company and accordingly deleted the disallowance made by the Assessing Officer . 3. Being aggrieved by the order of the ld. CIT(A) the revenue is in appeal before us taking following effective grounds of appeal:- a. On the facts and in the circumstances of the case and in law the CIT(A) erred in deleting the disallowance of ₹ 3,35,73,125/- being payments made to par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for and on behalf of everyone in the group. All the group companies reimbursed the expenses to M/s. J.B. Boda Co. Pvt. Ltd. on an equitable basis determined in earlier years by the management consultant. There is no material on record to show that the assessee has made payments to the contractor or sub-contractor or actual service provider. Therefore, the payments made to M/s. J.B. Boda Co. Pvt. Ltd. do not fall within the purview of section 40(a)(ia) of the Act. In M/s. Crowe Boda Company (supra), it has been held by the Tribunal vide para-6 of its order dated 30.3.2010 as under :- 6. On plain reading of above section, we find that any interest, commission or brokerage, rent, royalty fees for professional services or fees for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Y-party and not pertaining to X-party. Thus, the payment to M/s. J.B. Boda Co. made by the assessee is a simple reimbursement. In the case under consideration, the parent company M/s.J.B. Boda Co. Pvt. Ltd. has acted merely the role of agent for making payment of expenditure on behalf of the assessee and getting reimbursement. Therefore, the payment made to M/s. J.B. Boda Co. Pvt. Ltd. is not on account of any expenditure. Section 40(a)(ia) applicable only in a case of expenditure. The said section clearly provides that certain specific expenditure which is subject to TDS is not allowable if the assessee failed to make TDS or after making deduction of TDS does not pay within the stipulated period. As stated above, the payment made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer . The grounds taken by the revenue are therefore, rejected. ITA No.4253/Mum/2009 (A.Y. 2006-07) (Revenue s Appeal) : 7. At the time of hearing it has been agreed by both the parties that the facts and the issue involved are similar to the case in ITA No.4252/M/2009, M/s. J.B. Boda Surveyors Pvt. Ltd., therefore, the plea taken by them in that case may be considered while deciding the issue in the present appeal. 8. After hearing the rival submissions of the parties and perusing the material available on record and keeping in view of our finding recorded in para 6 of this order we hold and order accordingly. The grounds taken by the revenue are, therefore, rejected. 9. In the result, revenue s appeals stand di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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