Itxa/237/2012 Of The Commissioner Of Income Tax - 3 v. M/S. Emerson Process Management India Pvt. Ltd

*1* IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.237 OF 2012 The Commissioner of Income Tax-3 ..Appellant -Versus-M/s. Emerson Process Management(India) Pvt. Ltd...Respondent ........... Mr. Vimal Gupta, Senior Advocate, with Ms. Padma Divakar for the Appellant. Mr. R. Murlidhar i/b. Atul K. Jasani for the Respondent. ........... CORAM: S.C. DHARMADHIKARIAND B.P. COLABAWALLA, JJ. DATE :- 11[th] June, 2014 P.C.: 1]This appeal challenges the order passed by the Income Tax Appellate Tribunal, Mumbai, dated 12[th] August, 2011 in Income Tax Appeal No.8118/MUM/2010. The assessment year in question is 2006-07. 2]Mr. Vimal Gupta, the learned senior counsel submits that the order passed by the Tribunal deals with several grounds. The present appeal is restricted to the claim of the assessee for expenses paid by the assessee *2* 8.itxa237.12 company to its associate company on cost sharing basis amounting to Rs.74,33,557/-. This claim could not have been allowed by the Tribunal as the assessee had not deducted the tax at source on such payments made. That attracted section 40(a)(ia) of the Income Tax Act, 1961. Therefore, the appeal deserves to be admitted. It raises a substantial question of law. 3]On the other hand, it is contended that the Tribunal has based its order on the undisputed factual position and the finding of fact, therefore, in the case of assessee, the findings cannot be said to be perverse or vitiated by any error of law apparent on the face of the record. The appeal, therefore, deserves to be dismissed as it does not raise any substantial question of law. 4]Upon perusal of the memo of this appeal and all its annexures, what has been set out as the undisputed factual position is that the assessee company is in the business of manufacture of process control instrumentation. It paid to its subsidiary Emerson Electrict Co. India Pvt. Ltd., an amount of Rs.74,33,557/- on account of business service charges on cost sharing basis. The revenue itself has stated that the business service expenses were in the nature of salary/remuneration paid to the 2/4 *3* 8.itxa237.12 individuals who were regular employees of the associate/subsidiary. The department took the view that expenses may be incurred for services rendered and its payment by the assessee on cost sharing basis does not make any difference as the assessee was liable to deduct the tax at source. Since that has not been deducted, the assessing officer added the same to the income. The Income Tax Appellate Tribunal partly allowed the appeal by the impugned order. In doing so, the tribunal noted these undisputed facts. It came to the conclusion as has been set out in para-25 and 26 that if the expenses incurred have been reimbursed, then, the requirement to deduct the tax at source does not come into play. If these expenses have been incurred in the business of the associate/subsidiary and these are payments made to the regular employees employed by the subsidiary/associate and towards their salary, then, the reimbursement of such expenses by the present assessee would not require it to make any deduction. In other words, the tax would not be required to be deducted at source. In such circumstances and going by the factual position which is undisputed, we are of the view that the Tribunal was not required to answer any larger question or decide a wider controversy. Even we are not required to go into the same considering the peculiar facts and circumstances and the nature of the arrangement. The payment is thus, not for any service but as reimbursement of expenses is the conclusion 3/4 *4* reached upon noticing the undisputed factual position. In such circumstances, the view taken is a possible view and the appeal, therefore, does not raise any substantial question of law. The appeal, is therefore, dismissed. No costs. 3/4 *4* reached upon noticing the undisputed factual position. In such circumstances, the view taken is a possible view and the appeal, therefore, does not raise any substantial question of law. The appeal, is therefore, dismissed. No costs. (B.P.COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.) wadhwa