DCIT 14(3)(1), MUMBAI vs. TEMASEK HOLDINGS ADVISORS INDIA P.LTD, MUMBAI

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ITA 1198/MUM/2015Status: DisposedITAT Mumbai29 February 2016AY 2010-113 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the payments were in the nature of reimbursement of expenses and did not attract tax withholding obligations. Therefore, the disallowance made by the AO was not justified, and the DRP's direction to delete the addition was upheld.

What were the facts?

The Assessing Officer disallowed a payment of Rs. 8,10,39,406/- made by the assessee to its parent company for reimbursement of expenses, citing non-deduction of TDS under Section 195. The assessee had not deducted tax at source on this payment.

What were the issues?

Whether reimbursement of expenses to a foreign parent company without TDS is disallowable under Section 40(a)(ia) when Section 195 obligations are not met.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 195

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI ‘K’ BENCH, MUMBAI

Assessment Year: 2010-11 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI ‘K’ BENCH, MUMBAI [Coram: Pramod Kumar AM and Pawan Singh JM] Assessment Year: 2010-11 Dy. Commissioner of Income Tax – 14(3)(1) ........………………….Appellant Mumbai. Vs. Temasek Holdings Advisors India Pvt. Ltd. ..........………….…Respondent 12/3, North Avenue, Maker Maxcity, Bandra Kurla Complex, Bandra East, Mumbai. [PAN: AACCM 4000 H] Appearances by: Narendra Chand, for the appellant Porus Kaka/Divesh Chawla, for the respondent Date of concluding the hearing : January 5th, 2016 Date of pronouncing the order : February 29th, 2016 O R D E R Per Pramod Kumar AM:

1.

This appeal, filed by the Assessing officer, is directed against the directions issued by the Disputes Resolution Panel in the matter of assessment under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the Assessment Year 2010-11.

2.

Grievance raised by the appellant is as follows :- “1. On the facts and in the circumstances of the case and in law, the Dispute Resolution Panel erred in Deleting the Addition made by the AO u/s 40(a)(ia) of the Act amounting to Rs.8,10,39,406/- on the said payment to the parent company

Assessment Year: 2010-11 Page 2 of 3 situated at Singapore particularly when the assessee Company has not Deducted Tax u/s 195 of the Income Tax Act on such payment.”

3.

During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has made payment of Rs.8,10,39,406/- to Temasek Holdings Pte Ltd., Singapore without any deduction at source. While the Assessing Officer noted that the payment is on account of reimbursement of expenses, and that the same issue has been decided in favour of the assessee, by Tribunal’s orders for the assessment years 2007-08 and 2008-09, he proceeded to disallow the payment of Rs.8,10,39,406/- as tax was not deducted at source, as required by section 195, and as the relief granted by the Tribunal has been challenged before Hon’ble High Court. The assessee raised an objection, before the DRP, against this disallowance – as proposed by the Assessing officer. Following the stand taken by the Tribunal, DRP directed the Assessing Officer not to make this disallowance. The Assessing Officer is aggrieved and is in appeal before u.

4.

Having heard the rival submissions and having perused the material on record, and particularly bearing in mind the fact that the issue is covered, in assessee’s own case for the assessment years 2007-08 and 2008-09 and in favour of the assessee, by decisions of the co-ordinate benches, we are not inclined to disturb the relief granted by the DRP. We have no reasons to take any other view of the matter than the view so taken by the co-ordinate benches. Accordingly, we hold that the payments were in the nature of reimbursement of expenses not involving any tax withholding obligations, and the DRP is justified in giving the impugned relief.

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