Income Tax Appeal v. M/S Itd Cemindia Jv

Ladda IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL No. 1706 of 2016Pr. Commissioner of Income-tax-22..Appellant. ..Appellant. Vs M/s ITD Cemindia JV ..Respondent. Mr. Suresh Kumar for the Appellant. Mr. Tanzil Padvekar for the Respondent. CORAM : AKIL KURESHI & B. P. COLABAWALLA, JJ. DATED :- 12TH FEBRUARY, 2019. P.C.: 1This appeal by the Revenue under Section 260-A of theIncome Tax Act, 1961 challenging judgment of Income-tax AppellateTribunal (for short “Tribunal”). The appellant Revenue urgesfollowing question for our consideration:- “Whether on the facts and the circumstances of the casethe ITAT is correct in law in deleting the additions made by theAO in disallowing the reimbursement of the salary and relatedexpenses to the tune of Rs.5,67,80,664/- under Section 40 (a)(ia) of the Income Tax Act, 1961?” 2.The learned Counsel appearing for the parties pointedout that concerning this very assessee, a similar question wasconsidered by this Court in revenue's Income Tax Appeal No.1649 of 2016, which was dismissed by an order dated 23[rd]January, 2019 making the following observations : 2. Respondent assessee is a company registered under theCompanies Act. For the assessment year 2010-11, theassessee had filed its return of income which was taken inscrutiny by the Assessing Officer. In the assessment order,the Assessing Officer made disallowance of expenses ofRs.4.33 Crore (rounded off) in terms of Section 40 (a) (ia) ofthe Income Tax Act, 1961 (“the Act” for short). The assesseefiled appeal against the order of the assessment and resistedsuch disallowance. The Commissioner of Income Tax[Appeals] (“CIT (A)” for short] allowed the appeal notingthat the expenditure related to salary and related expenseswere paid to one ITD Cementation India Ltd., towards salaryand related expenses in respect of employees deputed towork in the joint venture (assessee). The CIT (A) furthernoted that the assessee vide letters dated 12/2/2013 and19/2/2013 had explained to the Assessing Officer that thenpayment was towards reimbursement of the salary expensespaid to ITD Cementation India Ltd. towards deputedemployees and personnel for doing the work of ITD CemIndia JV as per the contractual agreement in the Joint VentureAgreement. It was noted that ITD Cementation India Ltdhad provided employees and personnel for doing the workthe assessee company. In turn, ITD Cementation India Ltd.would raise debit notes relating too salary of the employeesto the assessee. On the basis of said debit notes, the assesseewould make the payment to ITD Cementation India Ltd. Theemployees working for the joint venture were actually theemployees of ITD Cementation India Ltd. The assessee,therefore, contended that on such payments, deduction of tax at source was not necessary. The CIT (A) accepted this view.The Tribunal also confirmed the view of the CIT (A) anddismissed Revenue's appeal. 3. Having heard the learned counsel and having perused thedocuments on record, we see no reason to interfere. Thefacts on record would suggest that the amount in questionwas paid by way of reimbursement of expenditure. Theemployees and personnel deputed by the company givingsuch workers on loan to the assessee company continued tobe the employer, the assessee merely reimbursed theexpenditure in terms of salary structure of the employees tothe employer company. There was, therefore, no question ofdeducting tax at source while reimbursing such costs. Wenotice that the Tribunal by the impugned judgment relied onits decision in case of this very assessee for earlierassessment year. This issue had travelled before this Court inIncome Tax Appeal No. 1826 of 2014 (CIT vs. M/s ITDCEM India Ltd) which was dismissed by the High Court on4/9/2017. 4. In the above view, no question of law therefore arises.The tax appeal is dismissed.” 3. In the result, this appeal is also dismissed. (B.P. COLABAWALLA, J.)