Pr. Commissioner Of Income Tax - 1 v. Goldman Sachs (India) Finance Pvt Ltd

R.M. AMBERKAR (Private Secretary) IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J.INCOME TAX APPEAL NO. 652 OF 2017 Pr. Commissioner of Income Tax - 1..Appellant Versus Goldman Sachs (India) Finance Pvt Ltd..Respondent(GSIFPL) ................... Mr. Suresh Kumar for the AppellantMr. Suresh Kumar for the Appellant ................... CORAM : AKIL KURESHI & S.J. KATHAWALLA, JJ. DATE : JUNE 6, 2019. P.C.: 1.The Revenue is in the appeal against the judgment ofthe Income Tax Appellate Tribunal, Mumbai (“the Tribunal”for short) dated 11.5.2015. 2.The following questions are presented for ourconsideration:- (i) Whether the ITAT was justified in holding that the AssessingOfficer formed a possible correct view and thereby cancellingthe order u/S. 263 dated 18.2.2015 especially when theassessee had not furnished any facts as to how the time spentby employees was determined and whether the amount wasactually spent by the recipient of reimbursement of expensesOfficer formed a possible correct view and thereby cancellingthe order u/S. 263 dated 18.2.2015 especially when theassessee had not furnished any facts as to how the time spentby employees was determined and whether the amount wasactually spent by the recipient of reimbursement of expenses amounting to Rs. 3,17,36,719/-? (ii) Whether the Tribunal was justified in holding on merits thatthere is no requirement to deduct tax at source onreimbursement of cost in the absence of documentaryevidence that income element is not involved in thereimbursement of expenses?"there is no requirement to deduct tax at source onreimbursement of cost in the absence of documentaryevidence that income element is not involved in thereimbursement of expenses?" 3. The appeal arises out of the judgment of the Tribunalholding that the Commissioner was not justified in enhancingrevisional powers under Section 263 of the Income Tax Act,1961 ("the Act" for short") and further holding that evenotherwise disallowance under Section 40A of the Act was notjustified since the assessee had made payments forreimbursement of the cost and therefore, requirement ofdeducting tax at source did not arise. 4.Learned counsel for the Revenue fairly brought to ournotice that for earlier assessment years, this Court had by anorder dated 26.2.2019, dismissed the Revenue's Income TaxAppeal No. 1742 of 2016 on the ground that the paymentmade for reimbursement of costs, deduction at source is notnecessary. The Court observed as under:- "3. The Tribunal, however, held that, the amount inquestion was by way of reimbursement of costs. The Tribunal held that Assessee had paid such sums towards administrative costssuch as the employee cost, rent, finance and legal corporaterecharge etc. The Tribunal noted that, GSIPL had providedservices to the assessee by deploying its employees for such workand the cost was for reimbursement for such expenses besidesother related expenditure. Revenue was unable to dislodge thesefindings of fact recorded by the Tribunal. That being the position,we must proceed on the basis that the payment in question was inthe nature of reimbursement of costs. As held by the SupremeCourt in the case of Director of Income Tax v/s. A. P. MollerMaersk A. S. reported in 78 taxmann.com 287 and consistentlyfollowed by this Court in the numberof decisions, liability to deducttax at source in such a case, would not arise. No question of lawarises." 5.In that view of the matter, it is not necessary toexamine the correctness of the Tribunal in relation to thefirst question. 6.In the result, the Income Tax Appeal is dismissed. [ S.J. KATHAWALLA, J. ] [ AKIL KURESHI, J ]