ITD CEMINDIA JV,MUMBAI vs. ASST CIT 19(2), MUMBAI

O R D E R

PER PAWAN SINGH, JM:

1. The Hon'ble Commissioner of Income Tax (Appeals)-30, has erred in law and facts in passing the order u/s 250 of the Act in gross violation of principles of natural justice.

2. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals)-30 has erred in facts and in law in upholding the action of the AO in disallowing reimbursement of salary and related expenses to the tune of `. 5,67,80,664/ - u/s 40(a)(ia) of the Income Tax Act, 1961.

3. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals)-30 has erred in facts and in law in upholding the action of the AO in disallowing expenses on account of shuttering material of `. 39,44,706/ - as revenue expenditure. 4. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals)-30 has erred in facts and in law in rejecting the claim of the assessee for grant of depreciation on entire shuttering material of `. 5,37,25,110/ - instead of limiting depreciation on `.39,44,706/ -only, 2. Assessee, who is an AOP is engaged in the business of rehabilitation and upgrading Highways, filed its return of income on 30.09.2009 declaring total loss of `. 20,45,580/-, the return of income was selected for scrutiny and the Assessing Officer (AO) while making the assessment made the disallowance u/s 40(a)(ia) of the Income-tax Act, 1961 of `. 5,67,80,664/- on the ground that payment of salary or remuneration made by Association is not allowable and deductible expenditure, and further disallowed a sum of `. 67,88,996/- on account of payment of commission, `. 19,15,898/- on account of administrative expenses and `. 39,44,706/- on account of capital expenses and initiated penalty proceedings u/s 271(1)(c) of the Act in its order dated 27.12.2011.

3. Against the order of AO, the assessee filed an appeal before the CIT(A). The CIT(A) while disposing of the appeal confirmed the disallowance of `. 5,67,80,664/- made u/s 40(a)(ia) of the Act and addition of `. 19,15,898/- on account of administrative expensive of `. 39,44,706/- on account of capital expenditure , and deleted the addition of `. 67,88,996/- on account of commission, against which the present appeal was filed before us.

6. In respect of ground no.2, 3 and 4 the Ld. AR of assessee has argued that ITD Cementation India Ltd. Had provided the employee for doing the work of in ITD Cem India JV, and it was raising the debit notes relating to the salary of the employee on the assessee, who had made the TDS @ 2% plus surcharge U/S194 C of on the amount paid to the ITD Cementation India Ltd, on the basis of Credit notes raised by them. It was further argued that it is a contractual arrangement as per JV agreement and in fact the employee working for the joint venture were the employee of ITD Cementation Ltd, tax deduction was not required to be made by the assessee u/s 192 of the IT Act in respect of payments made to ITD Cementation India Ltd, toward the salary of their employee working for the joint venture, since the payment was made towards the reimbursement of salary of and related expenses. The assessee has given confirmation received from ITD Cementation India Ltd that it had not claimed expenses on the salary amount reimbursed.