9911796707
TMI Blog2024 (6) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... r of CIT(A)-NFAC confirming the action of the AO in disallowing the assessee's payment made to its overseas group entities towards reimbursement of costs other than salary related to relocation of its secondment employees without deduction of TDS u/s. 195 of the Act, thereby invoking the provisions of section 40(a)(i) of the Act, disallowed a sum of Rs. 2.59 crores. For this, assessee has raised the following Ground Nos.2 to 4:- 2. The Lower Authorities erred in in disallowing the Appellant's payment of INR 2.59 Crores to its overseas Group entities, towards reimbursement of costs (other than Salary) related to relocation of its seconded employees (Relocation costs'), under section 40(a)i) of the Act. 3. The Lower Authorities erred in holding that the provisions of section 195 of the Act are applicable in respect of the payments towards the Relocation costs, without appreciating they are in the nature of 'reimbursements' of actual costs and do not constitute income in the hands of the recipient entities. The Lower Authorities have approached this issue, as if they are dealing with the salary costs of the Seconded employees, which are not the facts of this case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the letter clearly explains the nature of cost of secondment employees and the relevant reads as under:- Nature of Expenses Amount Salary and Perquisites that are reimbursed on which tax under Sec 192 is deducted and paid to the Government of India 25373661.00 Reimbursement of Medical insurance on seconded employees 3301795.00 Reimbursement of expenses like relocation, travel, immigration, accommodation etc 22588236.00 We noted, as explained by ld.AR, that the salary and perquisites paid are already suffered TDS u/s. 192 of the Act and there is no dispute about it. The remaining amount of Rs. 33,01,795/- being reimbursement of medical insurance and sum of Rs. 2,25,88,236/- being reimbursement of expenses like relocation, travel, immigration, accommodation, etc., are simpliciter reimbursement. The ld.AR explained that apart from salary where the assessee has deducted TDS, the two payments aggregate to Rs. 2,58,90,031/- is not liable for TDS as all are pure reimbursement. The ld.AR stated that these two components of expenses being reimbursement to SCB entities on account of secondment are in the nature of contribution to retirement and insurance schemes and cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed timelines. 7. We have heard rival contentions and gone through facts and circumstances of the case. We have heard ld. Senior DR and ld.AR. We noted that we have no details and mechanism for verification and hence, we direct the AO to verify the amount duly remitted within the prescribed timelines u/s. 115O of the Act and claim of assessee that it has paid DDT to the tune of Rs. 28.1 crores and accordingly, after verification allow the claim of assessee as per law. This issue is also remitted back to the file of the AO. 8. The next issue in this appeal of assessee is as regards to the issue not adjudicated neither by AO nor by CIT(A)-NFAC. For this, assessee has raised the following Ground No.6:- "6. The DDT liability of the Appellant under section 115-O of the Act, in respect of the dividends declared/paid by it during the Impugned AY to Standard Chartered Bank, PLC, a tax resident of the UK, shall be restricted to the applicable rate of tax on dividends prescribed under Article 11 of the India-UK DTAA." 9. We have heard rival contentions and gone through facts of the case. We noted that this issue of DDT liability of the assessee u/s. 115O of the Act in regard to divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finance lease of vehicles and for that for all practical purposes, the company treated it as finance lease as evidence from the annual account audited by statutory auditors and approved by Directors. Hence, the AO concluded that the lease transaction is categorized as financial/operating lease and in the audited accounts even the chartered accountant in Form No.3CA does not make any remark that vehicle taken on finance lease were actually operating lease. Hence, the AO treated the same as finance lease and disallowed the claim of deduction of Rs. 1,63,01,535/-. Aggrieved, assessee preferred appeal before CIT(A). 13. The CIT(A)-NFAC allowed the claim of assessee by observing in para 5.2.5 & 5.2.6 as under:- 5.2.5 The appellant made the short submission in the 'Statement of Facts', in this regard, that the A.O. failed to appreciate the fact that the expenses incurred on account of, lease rental was not a Capital expenditure and that as per lease agreement the ownership of the vehicles always rested with the lessor and not with the lessee (the appellant company, for example). Therefore, the appellant could not claim depreciation on the assets. The Ld.A.O. should have considered var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation on assets under the provisions of the Income-tax Act." The ld.AR stated that this circular is directly applicable to finance lease agreements and para 3 of the circular categorically states that the Accounting Standard will have no implication i.e., Accounting Standard 19 on the allowance of depreciation of assets under the provisions of the Act. The ld.AR further stated that AS-19 are for accounting of the company but for income-tax purposes, the assessee has computed the income and relevant computation is enclosed at page 196 of paper-book wherein the disallowable expenses or depreciation are disallowed and allowed expenses are claimed as allowable including lease rentals and depreciation. The ld.AR stated that the entire depreciation charge as per the books of account is disallowed u/s. 32 of the Act while determining the taxable income. Thus, the depreciation on assets taken on finance lease form part of this disallowance. The assets taken on finance lease are not capitalized in the block of asset dealing with motor cars. The principal component of lease rentals amounting to Rs. 1,63,01,535/- is claimed as deduction while computing taxable income. The interest com ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
