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TMI Blog2022 (4) TMI 1490X X X X Extracts X X X X X X X X Extracts X X X X ..... ring relevant facts has rightly held that amount paid by the assessee to associate enterprises is not in the nature of reimbursement of expenses, but payment made for rendering services. Scope of amended provisions of section 40(a)(ia) - The provisions of section 40(a)(ia) of the Act, has been amended along with provisions of section 201, by the Finance Act, 2012, as per which, if an assessee not held to be an assessee in default u/s.201 201(1A) of the Act, and further, if recipients have included sum paid by the assessee in their return of income and paid taxes and also furnished necessary certificate to that effect, then sum paid without deduction of tax cannot be disallowed u/s.40(a)(ia) In the case of CIT Vs. Hindustan Coco Cola Beverages Pvt.Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] had considered an identical issue and held that if the assessee files necessary evidence to prove that recipients have accounted sum paid without deduction of tax in their return of income and offered for tax, then same cannot be disallowed u/s.40(a)(ia) - In this case, the assessee has furnished necessary certificate from the associate enterprises and argued that sum paid by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.39,62,420/-. The assessment for the impugned assessment year had been completed u/s.143(3) of the I.T. Act, 1961, and assessed total income at Rs.1,96,08,546/- by making additions towards disallowance of payments made to employees of M/s.George Maijo and M/s.George Maio Co., Vizag and also M/s. Pandian builders u/s.40(a)(ia) of the Act, for non-deduction of TDS. The assessee carried the matter in appeal before first appellate authority, but could not succeed. The learned CIT(A) for the reasons stated in his appellate order dated 20.06.2016 dismissed appeal filed by the assessee. The assessee carried the matter in further appeal before the Tribunal and the Tribunal vide its order in ITA No.2192/Mds/2016 dated 08.06.2017 set aside the issue of disallowance of reimbursement of expenses to the file of the Assessing Officer for fresh verification. Consequently, the Assessing Officer while giving effect to the order of the Tribunal, assessed total income at Rs.1,96,08,546/- by disallowing reimbursement of expenses u/s.40(a)(ia) of the Act for non-deduction of TDS. 4. The assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee reiterated it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id TDS to the credit of the Central Government. Further, associate concerns have accounted reimbursement amount paid by the assessee in books of account and offered for taxation for the assessment year 2012- 13. Therefore, in light of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Hindustan Coco cola Beverages P.Ltd.(supra), impugned payments cannot be disallowed u/s.40(a)(ia) of the Act. 6. The learned DR, on the other hand, supporting order of the learned CIT(A) submitted that first of all, payment made by the assessee to sister concerns is not in the nature of reimbursement of expenses. Further, the assessee has failed to file necessary evidence to prove that recipients have included sum paid by the assessee in their return of income and paid necessary taxes. Therefore, the Assessing Officer well as learned CIT(A) have rightly disallowed payment u/s.40(a)(ia) of the Act, and therefore, their orders should be upheld. 7. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The Tribunal had set aside appeal to the file of the Assessing Officer with a specific direction to examine claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether claim of the assessee that recipients have accounted impugned payments made by the assessee in their return of income and paid necessary taxes to exclude those payments from purview of section 40(a)(ia) of the Act, in light of amended provisions of the Act. 9. The provisions of section 40(a)(ia) of the Act, has been amended along with provisions of section 201, by the Finance Act, 2012, as per which, if an assessee not held to be an assessee in default u/s.201 201(1A) of the Act, and further, if recipients have included sum paid by the assessee in their return of income and paid taxes and also furnished necessary certificate to that effect, then sum paid without deduction of tax cannot be disallowed u/s.40(a)(ia) of the Act. The amendment has been examined by various courts, including the Hon'ble Delhi High Court in the case of CIT Vs Ansal Land Mark Township (P) Ltd. 377 ITR 635 and held that said amendment is curative in nature and therefore, applicable with retrospective effect from the date of insertion of provisions of section 40(a)(ia) of the Act. The Hon'ble Supreme Court in the case of CIT Vs. Hindustan Coco Cola Beverages Pvt.Ltd. (supra) had consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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