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Income Tax Appellate Tribunal, MUMBAI BENCH “J” MUMBAI
Before: SHRI JOGINDER SINGH & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the Revenue. The relevant assessment year is 2011-12. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-2, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143 (3) of the Income Tax Act 1961, (the ‘Act’).
The ground raised
by the Revenue in this appeal reads as under: Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance of Rs.3,51,21,965/- made by the Assessing Officer u/s 40(a)(ia) when it has been clearly demonstrated that the so called reimbursements were actually payments on contractual nature as per agreements in an organized manner being made every year and not subjecting to such payments to above provisions would render them redundant.
3. Briefly stated, the facts of the case are that the audit report (Note ‘G’ of Schedule 12) mentions that Rs.3,51,21,965/- under various heads were reimbursed to group companies for expenses pertaining to employees and facilities in accordance with agreements on allocation of expenses to the company. In response to a query raised by the Assessing Officer (AO), the assessee submitted vide letter dated 27.11.2013 that the following amounts were reimbursed to group companies. a) Monsanto Holdings Pvt. Ltd. Rs.2,21,81,813/- b) Monsanto India Ltd. Rs.1,29,40,152/- Total Rs.3,51,21,965/- The AO held that the assessee is liable to make tax deduction at source (TDS) u/s 192C and further, if there is no deduction of the same or after deduction, there is no payment of the same to the government account, then the same is disallowable u/s 40(a)(ia). Thus the AO made a disallowance of the above reimbursement of Rs.3,51,21,965/- u/s 40(a)(ia).
4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) followed the order of the Tribunal for AY 2009-10 in the case of the assessee and deleted the above disallowance of Rs.3,51,21,965/-.