ITO (TDS) 2(3), MUMBAI vs. MILTON PLASTIC LTD, MUMBAI

During hearing of this appeal, Shri Vijay Kumar Soni, Ld. DR, advanced his arguments which is identical to the ground raised. None was present for the assessee, in spite of issuance of registered notice, therefore, we have no option to proceed ex-parte, qua the assessee, and proceed to dispose off these appeals on the basis of material available on record.

2.1. We have considered the submissions of the ld. DR and perused the material available on record. The facts, in brief, are that the assessee was held to be in default for not deducting tax u/s 194J on reimbursement expenses made to Milton Consultancy Services. In para -3 (Page-2) of the impugned order, there is uncontroverted finding that the assessee paid the amount of Rs.45,43,759/- during the previous year relevant to A.Y. 2005-06 to M/s Milton Consultancy Services being the cost of deputation of Man Power. This reimbursement is towards the salary paid to the employees of Milton Consultancy Services, who are deputed to work for the assessee. We further note that in para 3.1 of the impugned order, the ld. Commissioner of Income Tax (Appeals) has duly considered the submissions of the assessee alongwith various judicial pronouncements like Unite Hotels Ltd. vs ITO (2005) 93 TTJ (Del.) 822, Expeditors 3 M/s Milton Plastic Limited & 3133/Mum/2014 International (I) Pvt. Ltd. vs Addl.CIT (2008) 118 TTJ (Del.) 652. The assessee before the ld. Commissioner of Income Tax (Appeals) admitted that no doubt there was a combined bill but a clear brake up of service charges and reimbursement component were explained with the help of separate billing and accounted separately. This factual matrix was not controverted by the Revenue. CBDT Circular No.715 dated 08/08/1995 was also considered by the ld. Commissioner of Income Tax (Appeals), thus, the assessee was rightly held to be not liable for deducting the tax at source when reimbursement component was accounted separately by way of a debit note. The issue of non-deduction of TDS u/s 194A of the Act on interest of Rs.1,21,01,977/- on non-convertible debentures of Rs.2 crores issued to the Fedral Bank Ltd. has been discussed in para 4.1 and 4.2 (at page-5) in the impugned order, wherein, the assessee was held to be liable for default. However, for the issue in hand, we find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals) as no contrary evidence was brought on record by the Revenue. Finally, the appeals of the Revenue are dismissed. This Order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 28/10/2015.