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TMI Blog2016 (5) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and, therefore, disallowance u/s. 40(a)(ia) of the Act is not warranted. We find that the very same issue was considered by a Co-ordinate bench of this Tribunal in the assessee’s own case for the assessment year 2009- 10 holding that payments made by the assessee in pursuance of Cost Allocation and Recharge Agreement’ between the assessee and ‘GSISPL’ was purely on account of reimbursement of expenses which were incurred by GSISPL and hence there being no income element involved in such payments, there was no requirement to deduct TDS thereon. - Decided in favour of assessee - ITA No. 2227/MUM/2015 - - - Dated:- 11-5-2016 - Shri Jason P. Boaz Accountant Member And Shri Ram Lal Negi, Judicial Member For the Appellant : Shri J. D. Mistry For the Respondent : Shri Subachan Ram ORDER Per Jason P. Boaz, A. M This appeal by the assessee is directed against the order under section 263 of the Income Tax Act, 1961(in short the Act ) passed by the CIT -I, Mumbai vide order dated 18/2/2015 for assessment year 2010-11. 2. The facts of the case, briefly, are as under:- 2.1 The assessee company is a non-banking finance company engaged in stock broking, inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was any matter to be further investigated since he was of the opinion that there was no income element involved in the reimbursement of cost re-charge expenses. (iii) when two views are possible, section 263 of the Act cannot be invoked. It was argued that for assessment years 2009-10 and 2011-12, the first appellate authority has deleted the disallowance made on account of non-deduction of tax at source on re-imbursement of expenses. Therefore, if the Assessing Officer has adopted one view, the CIT in 263 proceedings, cannot adopt a different view as this constitutes a change of opinion which is not permissible in revision proceedings. It was accordingly urged by the assessee that the Ld. CIT, drop the revisionary proceedings. 2.4 The Ld. CIT on an analysis of the material on record observed that the assessee had made a payment of ₹ 3,17,36,719/- to an associate concern GSISPL , which is claimed to be reimbursement of expenses received by the said recipient for certain services provided and common expenses incurred by them on behalf of the assessee. The Ld. CIT was of the view that the fact that these expenses are incurred under an arrangement/agreement by Goldman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A)] order in the case of the Appellant itself in AYs 200910 and 201112) and hence, the order under section 263 of the Act is liable to be quashed; and Merger of order 5. erred in not appreciating the fact that the issue under consideration was a subject matter of adjudication before the CIT(A) in other years and hence, qua this issue, the order of the learned AO got merged with CIT(A) and hence, revision under section 263 of the Act is not permissible. 4.1.1 The Ld. Sr.Counsel for the assessee, Shri Jahangir Mistry stated that in the year under consideration, the assessee company leveraged on the employees and other infrastructure of its associate concern GSISPL and accordingly reimbursed the cost recharge expenses of ₹ 3,17,37,769/- incurred by GSISPL on behalf of the assessee. The fact is that all the material in relation to reimbursement of expenses was placed before the Assessing Officer in assessment proceedings vide letter dated 9/1/2013, copy placed at pages 47 to 55 of the Paper Book and the Ld. CIT in the impugned order has accepted that the Assessing Officer had looked into them. The specific submissions with respect to the re-imbursement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was also placed on the following judicial pronouncements in support of the proposition that the CIT cannot substitute his views on a particular issue in relation to which a view has already been taken by the Assessing Officer:- (i) CIT vs. Sunbeam Auto Ltd. (2010) 332 ITR 167 (Del) (ii) CIT vs. Nirma Chemical Works (P) Ltd. (2009) 309 ITR 67 (Guj) 4.1.4 The Ld. Sr. Counsel, placing reliance on the decision of the Hon ble Bombay High Court in the case of CIT vs. Reliance Communication Ltd. in ITA No.1816 of 2013 dated 28/03/2016, argued that, as discussed earlier, since all the relevant details /expenditure on the reimbursement made by the assessee to GSISPL were submitted to the Assessing Officer during the course of assessment proceedings, it can be inferred that the Assessing Officer not only made enquiries but also satisfied himself with the assessee s replies furnished in support of its stand. It was also brought to the notice of the bench that the Coordinate bench of the ITAT in its order in ITA No.2518/Mum/2013 in the assessee s own case for assessment year 2009-10 has held a similar view as the Assessing Officer on the very same issue and hence it cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income associated with the reimbursement of expenses to GSISPL and, therefore, the assessee was liable to deduct tax at source. 4.4.1 We have head the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. The facts on record indicate that in the year under consideration, the assessee had reimbursed GSISPL ₹ 3,17,37,719/- in respect of direct expenses incurred on its behalf in pursuance of a cost recharge agreement. An appreciation of the material on record shows that the material/details , etc. in relation to the aforesaid issue of re-imbursement of expenses was placed before the Assessing Officer in the course of assessment proceedings vide letter dated 9/1/2013(copy placed at page 47 to 55 of the Paper Book) and 30/10/2013, whereby it was submitted, inter-alia, that since the said expenditure was mere reimbursement of expenditure, no TDS was made thereon by the assessee while making the payments to GSISPL as ostensibly there was no income element embedded therein. We find from perusal of the impugned order that the Ld. CIT has himself admitted that the aforesaid details were filed by the assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factual and legal matrix of the case clearly evidences that in the course of assessment proceedings in the case on hand that all material relevant to the issue of reimbursement of expenses by the assessee to GSISPL were filed by the assessee before the Assessing Officer. It can be inferred that the Assessing Officer examined the same and was satisfied with the details filed and took a possible view in the matter. This view of the Assessing Officer has also been upheld by the Co-ordinate bench in the assessee s own case for AT 2009-10 in ITA No.2518/Mum/2013 dated 4/09/2015 on the very same issue. In these circumstances, we are of the considered view that the Ld. CIT was not justified in assuming jurisdiction under section 263 of the Act. In coming to this view, we draw support from the decision of the Hon'ble Bombay High Court in CIT vs. Reliance Communication Ltd. in ITA No.1816 of 2013 dated 28/03/2016, rendered wherein at para 10 thereof their Lordships have held as under:- 10. In the case before us, the concession of the assessee s authorized representative apart, what the Tribunal found and on all the three items highlighted by Mr. Tejveer Singh is that there wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of tax at source on such payments and, therefore, disallowance u/s. 40(a)(ia) of the Act is not warranted. We find that the very same issue was considered by a Co-ordinate bench of this Tribunal in the assessee s own case for the assessment year 2009- 10 in ITA No.2518/Mum/2013 dated 4/9/2015 and at para 5,thereof has dismissed Revenue s appeal holding that payments made by the assessee in pursuance of Cost Allocation and Recharge Agreement between the assessee and GSISPL was purely on account of reimbursement of expenses which were incurred by GSISPL and hence there being no income element involved in such payments, there was no requirement to deduct TDS thereon. The relevant portion of the decision at para-5 is as under:- 5. After considering the relevant finding given in the impugned order and also the submissions made by the parties, we find that assessee has reimbursed expenditure amounting to ₹ 1,73,07,000/to GSIPL which were incurred by it on the following heads : Particulars Amount(Rs.) Employee related cost 11,238,600 Rent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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