During The Course Of The Arguments, Learned Standing Counselrevenue Has Fairly Placed Before The Court A Copy Of Order Of This Courtin The Case Of Commissioner v. We Have Perused The Judgment Of This Court In Cit Vs. Itd Cemindia Jv (Supra) And We Concur With The Views Expressed Therein.however, For The Sake Of Convenienc

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL (IT) NO.1742 OF 2017 The Pr. Commissioner of Income Tax-25…AppellantVs.ITD CEM INDIA JV…Respondent Mr. Sham Walve for AppellantMr. Tanzil Padvekar for Respondent. P.C.: CORAM : UJJAL BHUYAN &MILIND N. JADHAV, JJ.DATE :JANUARY 20, 2020 Heard Mr. Walve, learned standing counsel Revenue for theappellant and Mr. Padvekar, learned counsel for the respondent. 2.This appeal has been preferred by the Revenue under Section 260-A of the Income Tax Act, 1961 assailing the legality and correctness oforder dated 19.10.2016 passed by the Income Tax Appellate Tribunal,Mumbai Bench, ‘I’, Mumbai (briefly ‘the Tribunal’ hereinafter) inrespect of Income Tax Appeal No.1246/Mum/2015 for the assessmentyear 2011-12. 3.Two questions have been proposed as substantial questions of law,which are as under: “1.Whether on the facts and in the circumstances of thecase and in law, the Tribunal erred in confirming the decisionof the Commissioner of deleting the disallowance made byassessing officer with respect to administrative expenses tothe tune of Rs.1,22,03,188.00 and on account of salaryu/s.40(a)(ia) of the Act to the tune of Rs.3,27,57,782.00 eventhough disallowed amount represented contractual paymentscovered under Section 194C and the assessee had failed todeduct tax before claim of deduction thereof as expenditure? 2.Whether on the facts and in the circumstances of thecase and in law, the Tribunal erred in deleting the addition made by the assessing officer pertaining to salaries andconfirmed by Commissioner on account of disallowanceu/s.40(ba) of the Income Tax Act, 1961, even though the saidpayment was made by the assessee which was an AOP to itsmember, holding that the provision of Section 40(ba) doesnot get attracted to the present case?” 4.From a reading of the two questions as proposed by the Revenuewhat is discernible is that there were two disallowances made by theAssessing Officer which were deleted by the first appellate authority i.e.,Commissioner of Income Tax (Appeals) as affirmed by the Tribunal.First is administrative expenses to the tune of Rs.1,22,03,188.00 and theother relates to salary for an amount of Rs.3,27,57,782.00. 5.During the course of the arguments, learned standing counselRevenue has fairly placed before the Court a copy of order of this Courtin the case of Commissioner of Income Tax Vs. ITD CEM India JV,(2018) 405 ITR 533 (Bom) and submits that the same issue was goneinto by this Court in respect of the same assessee for the assessment year2008-09. Regarding deletion of the disallowance under the head of‘administrative expenses’, it was held that it was a concurrent finding offact and no substantial question of law arose therefrom. However, on thequestion of deletion of the amount of salary which was disallowed bythe Assessing Officer under Section 40(ba) of the Income Tax Act, 1961,the same was remanded back to the Tribunal for a fresh decision onmerit and in accordance with law. 6.We have perused the judgment of this Court in CIT Vs. ITD CemIndia JV (supra) and we concur with the views expressed therein.However, for the sake of convenience, relevant portion of the decision isextracted hereunder:- “22.The Assessing Officer noticed that the assessee had notdeducted the Tax at Source while making payment on accountof administrative expenses. That was paid by the Joint Ventureto their Indian company, namely ITD Cementation IndiaLimited. The payment was hit, according to the AssessingOfficer, by Section 40(a)(ia) and thus disallowable. The Assessing Officer also held that even under Section 40(ba) thisexpense shall not be allowed because in the case of AssociationOf Persons, any payment of salary or remuneration bywhatever name called, is not allowable. 6.We have perused the judgment of this Court in CIT Vs. ITD CemIndia JV (supra) and we concur with the views expressed therein.However, for the sake of convenience, relevant portion of the decision isextracted hereunder:- “22.The Assessing Officer noticed that the assessee had notdeducted the Tax at Source while making payment on accountof administrative expenses. That was paid by the Joint Ventureto their Indian company, namely ITD Cementation IndiaLimited. The payment was hit, according to the AssessingOfficer, by Section 40(a)(ia) and thus disallowable. The Assessing Officer also held that even under Section 40(ba) thisexpense shall not be allowed because in the case of AssociationOf Persons, any payment of salary or remuneration bywhatever name called, is not allowable. 23.The assessee contended that there were fresh materials tosupport it's contentions. The Commissioner of Income Tax(Appeals) therefore directed the Assessing officer to considerthe further documents and submit a remand report. On remand,the assessee submitted that it reimbursed the expenses(administrative expenses) to ITD Cementation India Limited.They were incurred on behalf of the assessee. Thereafter, debitnotes were raised on the assessee by ITD Cementation IndiaLimited. These facts were checked and verified by theAssessing Officer and he found the same to be correct.However, in remand, he could not give any categorical finding,and therefore left the matter to the Commissioner of IncomeTax (Appeals). The Commissioner of Income Tax (Appeals),after considering the remand report and the detailed arguments,sustained the disallowance on account of non deduction of Taxat Source by referring to Section 40(a)(ia). That is how theassessee approached the Tribunal. The assessee inter aliacontended that no disallowance has been made in theassessment years 2006-2007 and 2007-2008 which assessmentwas framed under Section 143(3) of the IT Act. Thus, aconsistent stand should be taken and similar treatment shouldbe given to the accounts as in the preceding assessment years.The alternate argument is made and is noted in paragraph 49 ofthe Tribunal's order. The departmental representative referred tothe remand report and thereafter supported the finding of theCommissioner of Income Tax (Appeals). There were writtensubmissions filed by the assessee's representative. Inconsideration of this issue as well, we note that the Tribunal hasmade identical observations and to some extent it'sobservations in paragraphs 15 to 21 accord with paragraphs 50to 55. However, we are of the firm view that Section 40(ba)was referred in the passing, but not attracted as far as thedisallowance of administrative expenses in the sum ofRs.2,39,64,463/-. Once the Assessing Officer has checked debitnotes raised by the ITD Cementation India Limited and theywere test checked and the amount of expenditure claimed bythe assessee was verified and the genuineness of the same hasbeen proved, then, we do not see any reason to interfere withthe finding of fact recorded in paragraph 54 of the Tribunal'sorder. All the more, when Section 40(ba) was not attracted asfar as this disallowance is concerned. 24.Despite his persuasive ability, when Mr. Ahuja wouldsubmit that even the reframed question (a-1) is the substantialquestion of law, we are unable to agree with him. We affirm thefindings of fact by the Tribunal and dismiss this Appeal to that extent. 24.Despite his persuasive ability, when Mr. Ahuja wouldsubmit that even the reframed question (a-1) is the substantialquestion of law, we are unable to agree with him. We affirm thefindings of fact by the Tribunal and dismiss this Appeal to that extent. 25.However, we have expressed our displeasure andunhappiness at the manner in which the Tribunal approachedthe matter/issue insofar as the applicability of Section 40(ba)(question no. 10(a) reproduced above) of the IT Act isconcerned, we allow this Appeal. We set aside the Tribunal'sorder to that extent. We restore the issue to the file of theTribunal for being decided afresh on merits and in accordancewith law. The Tribunal shall not be influenced in any mannerby it's earlier observations. We also clarify that when we notethe rival contentions, beyond that exercise, we have expressedno opinion on the correctness of these contentions. All of themare open insofar as this issue is concerned for being raisedbefore the Tribunal. There will be no order as to costs.” 7.Therefore and considering the above, on the point of deletion ofthe disallowance of the salary amount, the matter is remanded back tothe Tribunal for a fresh decision on merit and in accordance with law. 7.1.Needless to say that the Tribunal shall not be influenced in anymanner by its earlier decision which we have set aside. 8.The appeal is accordingly disposed of. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Minal Parab