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TMI Blog2024 (6) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for airfare, packers and movers engaged to aid in the movement of expatriates and their family to India. Since the expenses were purely of internal business in nature, no taxes are required to be deducted on the same. Such receipt is not liable to tax in the hands of the employees since it was not an income that accrued to them for services rendered. The payment made to SCB entities are pure reimbursements and hence, not taxable. We noted that neither the AO nor the CIT(A)-NFAC has verified these payments and just simpliciter in mistaken notion considered these payments as salary to secondment employees. On principle, these being purely reimbursement and there is no mark up on these payments, no TDS is required to be deducted because these are not income in the hands of the assessee. But for limited purpose of verification, whether these are purely payment in the nature of contribution to retirement and pension scheme and relocation expenses, the AO will verify the vouchers and accordingly, allow the claim of assessee. In term of the above, this issue is remitted back to the file of the AO for limited purpose verification and allowed for statistical purpose. Non-Credit of Divid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered while arriving at the 'profit before tax' figure on the basis of which the income tax computation is prepared. The confusion created by the AO in regard to lease rental is explained as above. We noted that the facts of the case are crystal clear and assessee is eligible for claim of deduction in regard to depreciation on assets. Hence, we confirm the order of the CIT(A)-NFAC and accordingly, this issue of Revenue s appeal is dismissed. - Shri Mahavir Singh, Vice President And Shri Jagadish, Accountant Member For the Assessee : Shri Sriram Seshadri, CA For the Revenue : Shri P.Sajit Kumar, JCIT ORDER PER MAHAVIR SINGH, VICE PRESIDENT: These cross appeals by the assessee and Revenue are arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in ITBA/NFAC/S/250/2022- 23/1045558359(1) dated 16.09.2022. The assessment was framed by the National Faceless Assessment Centre, Delhi for the assessment year 2018-19 u/s. 143(3) r.w.s. 144B of the Income Tax Act (hereinafter the Act ) vide order dated 28.09.2021. Assessee s Appeal in ITA No.964/CHNY/2022 2. The first issue in this appeal of assessee is as regards t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making pension contributions in overseas location to such expatriate employees. But payment is made without deduction of TDS and hence, he disallowed this sum of Rs. 2,58,90,031/- by invoking the provisions of section 40(a)(i) of the Act. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A)-NFAC also treated the nature of payment as a reimbursement of salary cost paid to such group entities and therefore, he also under wrong notion noted that these payments are salary cost liable to TDS u/s. 192 of the Act and therefore, he invoking the provisions of section 40(a)(i) of the Act, confirmed the disallowance. 5. We have heard rival contentions and gone through facts and circumstances of the case. Before us, the ld.AR for the assessee stated that the AO CIT(A) both have misunderstood the issue and stated that the assessee has clarified this issue before AO vide letter dated 16.09.2021 wherein the assessee has given bifurcation of salary, reimbursement of medical insurance and reimbursement of expenses like relocation, travel, immigration, accommodation, etc. The ld.AR drew our attention to page 259 260 of assessee s paper-book wherein copy of this letter is enclosed, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A)-NFAC has verified these payments and just simpliciter in mistaken notion considered these payments as salary to secondment employees. On principle, these being purely reimbursement and there is no mark up on these payments, no TDS is required to be deducted because these are not income in the hands of the assessee. But for limited purpose of verification, whether these are purely payment in the nature of contribution to retirement and pension scheme and relocation expenses, the AO will verify the vouchers and accordingly, allow the claim of assessee. In term of the above, this issue is remitted back to the file of the AO for limited purpose verification and allowed for statistical purpose. 6. Coming to second issue of this appeal by assessee, is as regards to the lower authorities not giving credit to DDT paid to the extent of Rs. 28.1 crores u/s. 115O of the Act whereas, the assessee has duly remitted within the prescribed timelines. For this, assessee has raised the following Ground No.5:- 5. The Lower Authorities erred in not giving credit to DDT paid to the extent of INR 28.1 Crores under section 115-0 of the Act, which was duly remitted within the prescribed timelines. 7. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards to the order of CIT(A)-NFAC allowing lease rental payments being financial lease and allowance of depreciation. For this, Revenue has raised the following Ground Nos.2 3:- 2. The Ld.CIT(A) erred in failed to appreciate the fact that the principal portion included in the lease rental payments, being capital expenditure is not deductible as per the provisions of Sec.37(1) of the Income tax Act. 3. The Ld.CIT(A) erred in holding that the entire financial lease amount can be claimed for Income-Tax purpose. 12. Brief facts are that the assessee in its computation of statement claimed deduction of sum of Rs. 1,63,01,535/- on account of lease rental considered as revenue expenditure . The AO noted that as per printed annual accounts, the lease financials is secured against hypothecation of assets taken under finance lease. The assessee company claimed depreciation on motor vehicles on finance lease as the assessee took motor vehicle on finance lease and amount represents finance charges and principal repayment, both were computed separately in such lease. According to AO, the assessee entered into lease agreement with financing companies for finance lease of vehicles and for that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions, the owner of the asset is entitled to the depreciation if the same is used in the business, under section 32 of the Income-tax Act. The ownership of the asset is determined by the terms of contract between the lessor and the lessee. 2. The Central Board of Direct Taxes vide Instruction No. 1978 dated 31st December, 1999 [F.No. 225/190/98/IT(A-II)] has laid down the line of investigation in such cases. In cases where assets are factually non-existent, having been created by hawala transaction, the question of allowance of depreciation does not arise. In cases of sale and lease-back of assets without any alteration in the situation of assets and its working, the denial of depreciation claimed has to be considered keeping in view the principle laid down by the Supreme Court in the case of McDowell Co. Limited. 3. It has come to the notice of the Board that the New Accounting Standard on Leases issued by the Institute of Chartered Accountants of India require capitalization of the asset by the lessees in financial lease transaction. By itself, the accounting standard will have no implication on the allowance of depreciation on assets under the provisions of the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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