2019 (5) TMI 1257

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..... 15.93 crores as reimbursement. AO is directed to verify the invoice and decide the issue whether the impugned payments are reimbursements or not. We would like to make it clear that after verification, the Assessing Officer is free to make any enquiry he deems it fit to be made in the hands of the regional distributor as per the provisions of law. - Appeal filed by the assessee is allowed for statistical purposes.
Shri N.K. Billaiya, Accountant Member, And Shri K.N. Chary, Judicial Member For the Assessee : Shri Ajay Vohra, Sr Adv., Shri Aditya Vohra, Adv, Ms. Meenal Goyal, CA For the Revenue : Shri J.K. Mishra, CIT. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is preferred against the order of the Comm .....

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..... enditure incurred by the regional distributors for brand promotion of the company's products by advertisement in various forms. 7. The contention of the assessee did not find any favour with the Assessing Officer who was of the firm belief that the assessee was liable to deduct tax at source, failing which the provisions of section 40(a)(ia) of the Act would clearly apply and, accordingly, made the addition of ₹ 15,93,23,093/-. 8. The assessee carried the matter before the CIT(A) and reiterated its contentions. 9. After considering the facts and detailed submissions, the ld. CIT(A) found that in A.Y 2009-10, his predecessor had the occasion to consider a similar grievance and has allowed the appeal of the assessee. The CIT(A) furth .....

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..... No. 507 of 2013. 11. The ld. AR further drew our attention to the relevant clauses of the agreement with one of the distributors namely, Delta Prime Marketing Pvt Ltd. and pointed out that under the heading "Relation of Buyer and Seller", it has been specifically mentioned that this agreement does not create any agency, joint venture or partnership between Spice and the distributor. The ld. AR reiterated that the payment of ₹ 15.93 crores is nothing but reimbursement to regional distributor and therefore, the provisions of section 194C do not apply and, accordingly, section 40(a)(ia) of the Act is not at all applicable. 12. Per contra, the ld. DR strongly supported the findings of the Assessing Officer and vehemently submitted that .....

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