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TMI Blog2017 (10) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... DS u/s. 40(a)(ia) of the I.T. Act. 2. On the facts and in the circumstances of the case, the impugned order passed by the Ld. CIT(A) is perverse both in facts and law." 2. The brief facts of the case are that the assessee filed its return of income on 29.09.2009 declaring an income of Rs. 57,76,140/- which was processed u/s. 143(1). The case was selected for scrutiny and statutory notices were issued. On perusal of profit and loss account of the assessee, it was noticed that the assessee had debited a sum of Rs. 2,65,14,558/- under the head Personnel Cost. As per details filed in schedule 'F' , it was noticed that out of above expenses, the assessee had debited the amounts to two parties, which were also the Partners of the assessee fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssigned and cost incurred by RITES Limited. The ld. CIT(A) called for remand report from the AO and after considering the detailed reply of assessee, remand report of AO, relevant provisions of law, evidences adduced by assessee and various decisions on the issue, the ld. CIT(A) deleted the addition vide impugned order observing as under : 4.4 I have carefully considered the submissions made by the appellant and the arguments put forth by the Id. AR. I have also carefully considered the assessment order, as well as the Remand Report submitted by the AO. I find that both the assessment order and the Remand Report of the AO are based on presumptions, Suppositions, conjectures and surmises. The AO has presumed that there was a subcontract bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunnel in Jammu and Kashmir. Since, the appellant JV did not have any employees of its own, both- M/s. GC and M/s. RITES were required to assign qualified and experienced personnel having requisite expertise and knowledge to undertake the work assigned to the appellant-AOP as per contract by Northern Railway. This was in accordance with Clause 9.1 of the JVA and the manpower and other costs paid by each member of the JV-AOP were to be reimbursed by the appellant in terms of Schedule-II of the JVA. During the relevant A.Y. 2009-10, the appellant-AOP reimbursed expenditure aggregating to Rs. 2,65,14,237/- paid by the JV members for the purpose of execution of the project. The details of the employees assigned and cost incurred by M/s. GeoCons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in respect of "Income" or any other sum which comprises "An element of income". Obviously, an expenditure incurred by the payee cannot partake the nature of income or profit in its hands and therefore, no tax is deductable at source in respect of payment or reimbursement of such an expenditure by the payer. In the light of the facts and circumstances of the case and the discussion narrated above, it is held that the payments made by the appellant AOP to its JV partners were reimbursement of expenses which were not hit by the provisions of Section 40(a)(ia) of the Act. Therefore, the disallowances made by the AO of Rs. 2,65,14,237/- are hereby deleted." 3. The learned DR, relying on the assessment order, submitted that the deletion of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hom the impugned payment was made by assessee-AOP were the Joint Venture Members of the assessee-AOP. It is notable that as per clause 9.1 of the Joint Venture Agreement entered between the assessee-AOP and the Northern Railway, both GC and RITES have incurred the costs on manpower in the project of Northern Railway, which was reimbursable to them as per above contract entered with the main contractee to execute the project. The ld. CIT(A) has properly examined the details of employees assigned and cost incurred by both the Joint-Venture Members, i.e., GC and RITES and has clearly found that the amount actually incurred by them towards the manpower cost, was reimbursed to them by the assessee-AOP. Therefore, the ld. CIT(A) has rightly obser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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