Itxa/364/2012 Of The Commissioner Of Income-Tax- 4 v. Stratcap Securities (I) Pvt. Ltd

kps IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.364 OF 2012 The Commissioner of Income Tax-4.-Versus-Stratcap Securities (I) Pvt.Ltd.. ..Appellant ..Respondent ........... Mr.Vimal Gupta, Senior Advocate a/w Ms.Padma Divakar, for the Appellant.Ms.Beena Pillai i/by Niraj Punmiya, for the Respondent. ........... CORAM: S.C. DHARMADHIKARIAND B.P. COLABAWALLA, JJ. DATE :- 27[th] June, 2014 P.C.: 1We have heard Mr.Gupta, learned Senior Counsel appearing for the Appellant/ Revenue. The Revenue is in Appeal against the order of the Income Tax Appellate Tribunal in Income Tax Appeal No.7048/Mum/2008 dated 07.01.2011. The Assessment Year in question is 2005-2006. 2The Assessee appealed to the Tribunal against the order of the Commissioner of Income Tax (Appeals) dated 10.11.2008. 3We are only concerned with two claims of the Assessee. The Assessee had urged before the Tribunal that the Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs.2,37,01,175/-and the addition to the income of the Assessee for non-deduction of the tax to be deducted at source (TDS) on payments made under Section 40(a)(ia) of the Income Tax Act, 1961. 4Mr.Gupta submits that insofar as this claim is concerned the Assessee completely changed its stand before the Tribunal. In the Assessing Officer's order he refers to the letter dated 29.09.2008. There, the Assessee outlined that it is a subsidiary of M/s Strategic Capital Corporation Private Limited. The parent company suspended its business of investment banking and merchant banking activities and applied for non banking licence to the Reserve Bank of India. Pending such application before the Reserve Bank of India, it transferred its business of dealing in Government securities to the 100% subsidiary/ Assessee before us. This arrangement lasted for two years. The personnel and infrastructure of the parent company was utilized for which the payments were made to the parent company as per the Memorandum of Understanding. 5We have perused the relevant paragraphs of the memo of Appeal in which this arrangement is pleaded. We have also perused the discussion in the Tribunal's order on this claim from paragraph 14 onwards. In dealing with this claim in paragraphs 18 and 19 of the order under challenge the Tribunal did not notice any change of stance by the Assessee. There is no rendering of services by the parent company and there is no such agreement between the Assessee and the parent company, but throughout what is pleaded is that the personnel and other facilities of the parent company were utilized. Since their services were utilized for temporary duration the expenses in that regard were reimbursed to the parent company. It is not disputed that the parent company paid the salaries and emoluments to the employees and deducted the tax at source. It is the reimbursement of expenses in relation to utilization of services by the subsidiary and which is projected as basis of the claim throughout. There is rental income which is accruing to the parent company from this subsidiary and on payment of which the tax was deducted at source by the subsidiary is further undisputed position. It is in these circumstances that we do not find any perversity or error of law apparent on the face of record in the reasoning of the Tribunal. The first question, therefore, cannot be termed as substantial question of law. 6Insofar as the second question is concerned that is pertaining to the software expenditure and which is to the tune of Rs.02,03,500/-. That was clearly revenue in nature and the Tribunal's findings in that regard also do not suffer from perversity or error of law apparent on the face of record. 7As a result of the above discussion, the Appeal fails. It is dismissed. No costs. (B.P. COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.)