DCIT 1(1)(2), MUMBAI vs. M/S GOLDMAN SACHS INDIA FINANCE P.LTD, MUMBAI

These are the cross appeals filed by the parties against the order passed by the Commissioner of Income-tax (Appeals)-2, Mumbai [CIT (A)] for A.Y. 2015-16 on 29th March, 2019.

In Assessing Officer raised following grounds of appeal:-

Brief fact of the case shows that assessee is a Private Company and is a non deposit taking non banking finance company. For AY 2015-16, assessee filed its return of income on 24th November, 2015 at a total income of ₹24,20,74,290/-. The return of income of the assessee was picked up for limited scrutiny. During the course of assessment proceedings, the learned Assessing Officer examined the issue of payment of ₹17,24,877/- paid to M/s Goldman Sachs (India) Capital Markets Pvt. Ltd. (in short GSICMPL). This expenditure was stated to be recharge of employee cost, technology cost and other administrative charges. Assessee stated that this

Further, the learned Assessing Officer noted that assessee has also incurred certain employee related expenses to its various related parties. As per the detailed contained in note no. 3.26 of financial statements assessee noted that out of total amount assessee has deducted tax at source on amount of ₹5,53,82,350/- paid to GSISPL but on the balance sum of ₹2,74,17,650/- no tax is deducted at source. Assessee once again stated that this expenditure are in the nature of reimbursement of expenses paid by group entities on behalf of the assessee comprising of employee related cost and corporate recharges such as telecommunication and administrative expenses. As there is no element of income in the reimbursement of expenses, taxes were not required to be withheld. Assessee submitted various copies of invoices. The learned Assessing Officer rejected the contention of the assessee holding that assessee has failed to prove that these are actual reimbursement. The learned Assessing Officer further found that assessee has paid ₹3,23,00,000-/ as recharge without tax deducted at source to nonresident related parties on which the disallowance is 100% of such expenses. He also found that assessee has paid ₹2,74,17,650/- as recharge without TDS to resident related parties and disallowance for non-deduction would be to the extent of 30% amounting to ₹82,25,295/-. Therefore, the learned Assessing Officer passed an assessment order under Section 143(3) of the Act on

With respect to the payment to the domestic group entities, he held that the issue has already been decided in favour of the assessee by the co-ordinate bench for A.Ys. 09-10 & 11-12 and further, appeal of the Revenue before the Hon'ble High Court is also dismissed vide order dated 26th February, 2019 in of 2016. Therefore, he deleted the disallowance under Section 40(a)(ia) amounting to ₹5,17,463/- and ₹82,25,295/-. With respect to the disallowance of ₹3.23 lacs, he categorically noted that a sum of ₹3.06 crores is merely in the nature of reimbursement without any element of profit and therefore, no tax is required to be withheld. He further held that as the appellant is already making TDS on the sum under Section 192 of the Act, if tax is deducted on this sum, it would be result into double deduction of tax at source. Therefore, he deleted the disallowance of ₹3,06,00,000/- under Section 40a(ia) of the Act.

With respect to the balance sum of ₹17 lacs, assessee submitted before him that it has already deducted tax in respect of payment of ₹9,25,546/- but same could not be brought to the notice of the learned Assessing Officer.

Coming to the appeal of the learned Assessing Officer, the learned Departmental Representative vehemently supported the order of the learned CIT (A) and submitted that assessee has failed to proof the reimbursement of expenditure. The addition has been deleted by the learned CIT (A) incorrectly. The learned Authorized Representative supported the order of the learned CIT (A).

We have carefully considered the rival contentions and find that the learned CIT (A) has correctly deleted the addition of ₹3,06,00,000/- by giving the reason that these are the expenses that employees related to Goldman Sachs Group Inc. USA (GSGI). The above group has stock award plan which are also extended to the employees of its group company. The assessee has granted these stocks to its employees on fulfilling of certain conditions. After

Coming to the appeal of the assessee, both the parties heard.

We find that on the balance payment of ₹17 lacs, the assessee has raised two arguments. The first argument is that on some of the payment, assessee has already deducted tax at source and secondly, part of the expenditure is merely reimbursement of expenditure on

In the result, appeal filed by the learned Assessing Officer is dismissed and appeal filed by the assessee is allowed for statistical purposes.