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TMI Blog2012 (11) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding disallowance of impugned amount in accordance with law. X X X X Extracts X X X X X X X X Extracts X X X X ..... royalty. Ld. CIT(A) has upheld the action of AO. The assessee is aggrieved, hence, in appeal. 3. It may also be mentioned here that AO did not dispute the fact that the aforementioned amounts are in the nature of reimbursement as AO himself has noted in the assessment order in para 3.1 that these payments are in the nature of reimbursement. The AO has excluded a sum of ₹ 86,21,890/- paid by it to M/s. Mahyco Seeds Ltd. as the TDS was deducted on the said amount and the balance amount of ₹ 8,37,22,826/- was disallowed out of aforementioned amount of ₹ 9,23,44,716/-. 4. After narrating the facts it was submitted by Ld. A.R that AO himself has accepted that these payments are in the nature of reimbursement and if it is so, disallowance under section 40(a)(ia) not to be made relying upon aforementioned two decision. He submitted that AO has wrongly distinguished the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Siemens Aktiongesellchaft(supra) on the ground that the said decision was rendered on royalty. He submitted that it has clearly been held by Jurisdictional High Court that reimbursement of expenses can, under no circumstances be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company of J.B. Boda group of companies, incurs all management, administrative expenses on behalf of all group companies who share the common facilities and then recovers it from the respective participants on actual basis as far as possible. It was further submitted that M/s. J.B. Boda & Co. Pvt. Ltd. which is actually making the payments for the expenditure has been deducting tax at source and hence, complies with the provisions of deducting tax at source. It was further submitted that if the deduction is made by the assessee then it would amount to double deduction. The reliance was also placed on (i) ACIT vs. Modicon Networks P. Ltd. 14 SOT 204 (Del.); (ii) DECTA, In re 237 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 reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest, commission or brokerage, rent, royalty fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub- contractor being resident for carrying out any work including supply of labour for carrying out any work on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or after deduction has not been paid within stipulated period. In the case under consideration, the Assessing Officer did not specifically point out as to under which clause or under which sub-section of section 40 the claim of the assessee was disallowed. The contention of the assessee is that the payment made to parent company, M/s. J.B. Boda & Co. Pvt. Ltd. is payment of reimbursement of expenses and not against carrying out any contract work as a contractor or sub-contractor, on which, tax is deductible at source under Chapter XVII-B of the Act. The assessee has established that the payment to their parent company M/s. J.B. Boda & Co. Pvt. Ltd. was not subject to TDS as payments were not made against any contract work carried out. It is an admitted fact in the case consideration that the payment made to parent co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctfully following the order of the Tribunal 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 Assessing Officer . The grounds taken by the revenue are therefore, rejected." 4.1 Thus it was pleaded by Ld. A.R that the issue is covered by aforementioned decision. He submitted that noting this fact it was observed by the ITAT in the order that prima facie the case is in favour of assessee. Thus it was pleaded by Ld. A.R that addition should be deleted. 5. On the other hand, Ld. D.R relied upon the order passed by the AO as well as Ld. CIT(A). 6. We have carefully considered the rival submissions in the light of material placed before us. We have carefully gone through the assessment order. The AO did not dispute the fact that the impugned amount was in the nature of reimbursement expenses on cost to cost basis. If it is so, according to the ratio of the decision rendered by Co-ordinate Bench in the case of ACIT Vs. J.B.Boda Surveyors Pvt. Ltd.(supra) , it has to be held that the disallowance cannot be made as it has not been shown o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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