9911796707
TMI Blog2021 (6) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... bring said payment within the ambit of TDS provision. But, the fact remains that assessee has to file necessary evidences including bills and vouchers to prove that said payment is reimbursement of expenses to its Head office for allocation of common expenses. In this case, the AO as well as the ld.CIT(A) has brought out clear facts to the effect that the assessee has failed to file necessary evidences including agreement between parties and bills vouchers in support of its claim. The issue needs to go back to file of the AO to reconsider the issue that said payment is reimbursement of expenses to its Head office for allocation of common expenses to various Branch offices. In case, the assessee files necessary evidences to prove its claim, then the AO is permitted to cause necessary enquiries and take appropriate decision in accordance with law. Disallowance of payment made to related parties - HELD THAT:- We find that although the assessee claims it has reimbursed a sum to its Head office for allocation of common expenses incurred by Head office and charged off to various Branch offices, but failed to file any evidences including agreement, bills and vouchers in support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice expenses of ₹ 52,11,040/-. GROUND 3 Disallowance of Payments made to Related Parties of ₹ 77.39.322/- The CIT(A) erred in law and on facts of the case by disallowing Payments made to Related parties against reimbursement of expenses as liable for deduction of TDS. CIT(A) also erred in assuming that expenses incurred by the Head office of the Appellant foreign company on the project are liable for deduction of TDS. CIT(A) also erred that purchases of goods warrant deduction of TDS. CIT(A) also erred in rejecting the evidences produced. The appellant respectfully prays that the directions of the CIT(A) to the AO be quashed and AO be directed to allow the payments made to related parties of ₹ 77,39,322/- GROUND - 4 Double Disallowance of ₹ 52,11,040/- The CIT(A) erred in disallowing an amount of ₹ 52,11,040/- twice, 1st as External Service of ₹ 52,11,040/- and then again in ₹ 77,39,322/- under expenses incurred by Head Office. The appellant respectfully prays that the directions of the CIT(A) to the AO be quashed and AO be directed to allow the expenses of ₹ 52,11,040/- GROUND - 5 Request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Admittedly, the assessee has filed sample bills for hire charges and this fact has been accepted by the AO. The AO after considering bill submitted by the assessee has accepted claim of hire charges and out of total expenses incurred for the year at ₹ 5,85,000/- has allowed deduction for an amount of ₹ 2,92,500/-. However, balance amount of ₹ 2,92,500/- was disallowed in absence of bills and vouchers. The assessee has filed a paper-book which contains copies of bills issued by M/s. Vardhman Diesel Generators, as per which the assessee has submitted bills and vouchers for total expenditure incurred by the assessee at ₹ 5,85,000/-. Therefore, we are of the considered view that the AO was erred in disallowing part of expenses even though he has accepted claim of the assessee regarding part of expenses and has also accepted legal position that there is no requirement of deduction of tax at source on such payment and hence, we direct the AO to delete addition towards hire charges at ₹ 2,92,500/- u/s.40(a)(ia) of the Act. 5. The next issue that came up for our consideration from Ground No.2 of assessee appeal is disallowance of External service charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for non-deduction of TDS. 5.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. It is an admitted fact that one cannot make profit by himself. Therefore, any payment by a Branch office to its Head office is a payment by self, which cannot be considered as a payment to a third party nor bring said payment within the ambit of TDS provision. But, the fact remains that assessee has to file necessary evidences including bills and vouchers to prove that said payment is reimbursement of expenses to its Head office for allocation of common expenses. In this case, the AO as well as the ld.CIT(A) has brought out clear facts to the effect that the assessee has failed to file necessary evidences including agreement between parties and bills vouchers in support of its claim. Therefore, we are of considered view that the issue needs to go back to file of the AO to reconsider the issue that said payment is reimbursement of expenses to its Head office for allocation of common expenses to various Branch offices. In case, the assessee files necessary evidences to prove its claim, then the AO is permitted to cause necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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