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TMI Blog2018 (6) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income Tax(Appeals)-4, Vadodara [CIT(A) in short] vide appeal no.CAB/4-261/14-15 dated 23/07/2015 arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 05/03/2014 relevant to Assessment Year (AY) 2011-12. 2. First, we take up the grounds of appeal raised by the Revenue in ITA No.3195/Ahd/2015 for A.Y. 2011-12, which are as under:- 1. On the facts and in the circumstances of the case the learned (A) has erred in law and on facts in deleting entire addition of ₹ 58.03 lacs, without appreciating that as per the assessee's submission during the course of assessment proceedings, (para 04 of assessment order), it had admitted that out of payment of ₹ 86.52 lakhs, payment of ₹ 67.98 lakhs (payment of ₹ 28.49 lacs on which tax was deducted + payment without deduction of tax for a reasonable cause of ₹ 39.49 lacs),was a allowable deduction, meaning thereby that the balance payment of ₹ 18.54 lacs on which no tax was deducted (Rs. 86.52 lacs minus ₹ 67.98 lacs) was not a allowable deduction, and the same was deserved to be upheld by the C.I.T.(A). 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS u/s 194-C of the Act. However, the AO disregarded the contention of the assessee and held that the assessee was liable for deduction of TDS even on the reimbursement of expenses. Accordingly, the AO disallowed the sum of ₹ 58,03,774/- and added to the total income of the assessee. 5. Aggrieved, assessee preferred an appeal to learned CIT(A). The assessee before the learned CIT(A) submitted that M/s. S. K. Agency has incurred certain expenses in connection with the import of goods made by and on behalf of the assessee. Besides the reimbursement of expenses, M/s S.K. Agency was also paid professional charges by the assessee after the deduction of TDS. The assessee also submitted that similar disallowance was deleted by the learned CIT(A) pertaining to the A.Y. 2008-09, 2009-10 and 2010-11. The learned CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under: 3.3 I have considered the submissions of the learned Authorized Representative and the order of the Assessing Officer. I agree with the Authorized Representative that the matter is covered in favour of the appellant by the decision of the jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual basis and the reimbursement amount were shown separately and supported by necessary evidence. The Assessing Officer did not dispute the fact that the payment in question were reimbursement of expenses. Detailed working in regard to the submission para-1 dated 19/02/2014 is mentioned here under. A. Total C F Expenditure incurred by M/s. S.K. Agency towards C F Expenses was ₹ 86.52 Lakhs. B. Out of the same TDS made on Importation Charges of ₹ 28.49 Lakhs C. Out of the same Reimbursement of Expenses of ₹ 58.03 Lakhs. D. A= B+C Detailed working in regard to the submission para-2 dated 19/02/2014 is mentioned here under. A. Total C F Expenditure incurred ₹ 88.11 Lakhs. B. Out of that S.K. Agency has incurred C F Expenditure of ₹ 48.62 Lakhs. C. Out of that other parties have incurred C F Expenditure of ₹ 39.49 Lakhs. We have not deducted TDS on some of Transport Agency who has furnished PAN and payment made which is less then threshold limit. D. A=B+C It is pertinent to note that Amount of ₹ 48.61 Lakhs paid to S.K.Agency is already included in the figure of reimbursement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely identified in the bills and does not apply in respect of reimbursement of actual expenses. The Circular is applicable only to payment made on principal to principal basis and not in the case where payment was on principal to agent basis. There is no element of income in the reimbursement of the expenses in the hand of payee and therefore it cannot be regarded as a revenue receipt so that it is not taxable. These expenses do not have any nexus with the commission or freight charges he is supposed to earn for his work. The appellant submit that the issue under reference is covered in faovur of the assessee by the decision of Honorable Jurisdictional High Court/Tribunal as under. [ 1] CIT vs. Gujarat Narmada Valley Fertilizer Co. Ltd. 2013 35 Taxman 638 (Guj-HC). [ 2] M/s. Dhaanya Seeds Pvt. Ltd. vs. Dy. Commissioner of Income Tax, Bengalore. CO.No.55/Bang/2013 [ 3] CIT vs. Industrial Engineering Project Pvt. Ltd. (1993) 202 ITR 1014 (Del) [ 4] CIT vs. Fourtis Healthcare ltd. (2009) 181 Taxman 257 (Del). [ 5] CIT vs. DLF Commercial Project Corporation (2015) 379 ITR 538 (Del). [ 6] CIT vs. Information Architects (2010) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agency but counsel for the assessee failed to provide the same. In our considered view, it is necessary to observe the fact whether M/s. S. K. Agency has incurred cost on behalf of the assessee and for this purpose the agreement between the assessee and M/s. S. K. Agency was required to be referred. In the absence of specific documents, a query was again raised to the counsel for the assessee for restoring the matter to the file of AO for fresh adjudication in the light of the agreement as discussed above and in accordance to the provisions of law, the ld. Counsel for the assessee did not object. Therefore we are inclined to restore the issue to the file of the AO for fresh adjudication as per law after verification of the agreement between the assessee and M/s. S. K. Agency. Learned DR also did not object, if the matter is restored back for fresh adjudication to the file of the AO by the provision of law. Given this, we restore this issue to the file of the AO for fresh adjudication by the law. Hence, the ground of appeal of the Revenue is allowed for statistical purposes. 7. Now we take up the grounds of appeal of the assessee in Cross Objection No.225/Ahd/2015 (in ITA No.319 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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