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TMI Blog2022 (8) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) as concerned partner has confirmed the receipt of remuneration and payment of tax on such remuneration - HELD THAT:- We find that we are in agreement with ld. CIT(A). He has factually examined the issue and given a finding of fact. This finding could not be rebutted by the Revenue. Hence, we uphold the order of ld. CIT (A). - ITA No.5123/Del./2019 ITA No.4617/Del./2019 ITA No.7236/Del./2018 - - - Dated:- 5-8-2022 - SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER And SHRI YOGESH KUMAR US , JUDICIAL MEMBER ASSESSEE BY : Shri Niraj Setha , Advocate Shri Ashesh R. Safi , CA Ms. Ekta Chopra , CA REVENUE BY : Md. Gayasuddin Ansari , Senior DR ORDER PER SHAMIM YAHYA , ACCOUNTANT MEMBER : These are cross appeals by the assessee and Revenue for the Assessment Year 2013-14 and appeal by the assessee for the Assessment Year 2014-15. 2. Since the issues are connected and appeals were heard together, these are being consolidated and disposed off by this common order. REVENUE S APPEAL ITA No.5123/Del/2019 (AY 2013-14) 3. The grounds of appeal in Revenue s appeal read as under :- 1. On the facts and in the circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deloitte Haskins Sells in ITA No.651/Kol/2017 for AY 2012-13 dated 28.09.2018; (iv) ITAT, Ahmedabad Bench in ACIT vs. M/s. Deloitte Haskins Sells in ITA No.682/Ahd/2016 for AY 2010-11 dated 28.06.2018; (v) ITAT, Mumbai in ACIT vs. Arthur Anderson Co. [2006] 5 SOT 393; and (vi) ITAT, Ahmedabad Bench in DCIT vs. M/s. Deloitte Haskins Sells in ITA No.1983/Kol/2017 for AY 2013-14 ITA No.1984/Ahd/2017dated 01.10.2019; 5. Ld. DR for the Revenue could not dispute the proposition. It is also not the case that Hon ble jurisdictional High Court has reversed the order of ITAT. Since the ITAT in assessee s own case consistently decided the issue in favour of the assessee and no case has been made out that facts are different, respectfully following the coordinate Bench decisions, we uphold the order of ld. CIT (A) on this issue. 6. Apropos disallowance u/s 40(1)(ia) for the payment made to Deloitte Touche Tohmatsu India Pvt. Ltd. : On this issue, the AO has disallowed u/s 40(a)(ia) for payment of Rs.4,39,28,027/- made to Deloitte Touche Tohmatsu India Pvt. Ltd. paid under different heads for the reason that these were reimbursement of expenses, hence no TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of expenses cannot partake the nature of income in the hands of the payee of such expenses. Ld. CIT (A) made further following observations in deleting the disallowance :- During the remand report proceedings the AO has not commented on the submissions made by the appellant like detailed confirmation of DTTIPL and form 26A submitted to AO, on merit. The following observations are made on merit: The facts of the case clearly point out that there is reimbursement of expenses by the appellant to DTTIPL as per actual cost allocated on the scientific basis. There is no element of profit in the hands of DTTIPL as there is no mark up on actual cost to DTTIPL. These reimbursement of expenses to DTTIPL by various group entities including the appellant have been accounted as deduction from gross expenses by DTTIPL and not receipts. The DTTIPL had paid taxes on all the income received by it. The DTTIPL has deducted TDS on payments made by it on gross basis, wherever it is required under the law. These expenses were duly allowed to the appellant without deduction of TDS in preceding and succeeding financial years. The judgement of ITAT Delhi in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reasoned order. His finding of fact that these are reimbursement of expenses which have not been disputed by the Revenue. Hence, in light of case laws referred above, we do not find any need to interfere in the order of ld. CIT (A). Accordingly, we uphold the same. 11. Apropos disallowance of remuneration paid to partners : On this issue, AO noted that from the perusal of profit loss account, an amount of Rs.5,78,00,000/- is claimed as partner s remuneration. The assessee was asked to submit partnership deed. From the perusal of partnership deed, AO noted that the amount of Rs.5,28,00,000/- is mentioned instead of Rs.5,78,00,000/- as claimed. On being asked from the assessee, the assessee submitted revised partnership deed which authorizes Rs.5,78,00,000/- remuneration from stamp paper dated 01.08.2012, hence AO held that remuneration so paid for 01.04.2012 and 01.08.2012 is in contradiction to section 40(b) of the Act. AO was not satisfied with the assessee s reply and proceeded to make the disallowance of Rs.16,66,667/-. 12. Upon assessee s appeal, ld. CIT (A) was of the opinion that AO has not been able to fully understand assessee s agreement in this regard. He delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o disagree with the above observation of CIT(A) for A.Y. 2014-15. therefore, the addition made by the AO of Rs.16,66,667/- is hereby deleted and this ground of appeal is allowed. 13. Against this order, Revenue is in appeal before us. We have heard both the parties and perused the records. 14. Ld. counsel of the assessee placed reliance on the order of ld. CIT (A). He submitted that remuneration paid to partners in terms of the partnership deed; that the aggregate of remuneration paid within the limit provided in section 40(b) of the Act. He further submitted that the concerned partner has confirmed the receipt of remuneration and payment of tax on such remuneration. Per contra, ld. DR could no dispute the submissions made. 15. We find that we are in agreement with ld. CIT(A). He has factually examined the issue and given a finding of fact. This finding could not be rebutted by the Revenue. Hence, we uphold the order of ld. CIT (A). ASSESSEE S APPEAL ITA No.4617/Del/2019 (AY 2013-14) 15. Grounds of appeal raised by the assessee on the issues read as under :- 1. Disallowance of payment to Retired Partners Rs.1,75,81,653/- 2. Disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (x) Hon ble Madras High Court judgement in CIT v. V.N.V. Devara Julu Chetty Co. (18 ITR 357) (Mad) (xi) Hon ble Bombay High Court judgement in CIT v. Mulla Mulla Craigie Blunt Caroe (190 ITR 198) (Bom) (xii) Hon ble Bombay High Court judgement in CIT v. Nariman B. Bharucha Sons (130 ITR 863) (Bom) 19. Upon careful consideration, we note that ITAT in assessee s own case vide order dated 15.01.2021 in ITA No.3715/Del/2017 for AY 2011- 12 and ITA No.3716/Del/2017 for AY 2012-13 has decided this issue in favour of the assessee as under :- 7.2 As far as the issue of disallowance of payment to Retired partners in Assessment Year 2011-12 is concerned, it is seen that this issue is also settled in favour of the assessee by numerous judgments of the Hon ble High Courts as well as the Co-ordinate Benches of the Tribunal. We find that an identical issue had come up before the ITAT Chennai bench in the case of a related concern of the assessee in assessment year 2011 - 12 and the ITAT Chennai bench in ITA No. 2077/MDS/2016, vide order dated 25/11/2018, after relying on an order of ITAT Mumbai Bench in the case of CC Chokshi Co. for assessment years 2000-01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low, the assessee is entitled to claim the same as a deductible expenditure. In the present case, the assessee has made cash payment to the various parties after duly deducting tax at source. The portion of the amount paid to them has already been allowed to the assessee as a deductible expenditure. However, the issue is whether the amount of tax deducted at source from the payment made to the recipient of such income can be said to be the amount of expenditure incurred by the assessee and paid during the year and, therefore, is it allowable to the assessee as business expenditure. We note that according to the provisions of section 198 of the Income Tax Act, 1961 (hereinafter called the Act ), tax deducted in accordance with the provisions of the Act is deemed to be the income received by the recipient of the income. Therefore, according to the Act itself the amount of TDS is deemed to have been received by the recipient of the income. Therefore, in our considered opinion, it cannot not be said that the assessee had not paid the amount of tax deducted at source to the recipient of the income from whose payments the tax had been deducted. TDS is a liability cast upon the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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