September 2018
46. CIT vs. ITD Cem India JV.; 405 ITR 533 (Bom): Date of order: 4th September, 2017 A. Y.: 2008-09 Section 40(a)(ia) – Business expenditure – Disallowance – Payments liable to TDS – Reimbursement of administrative expenses to joint venture partner – Genuineness of transaction established on verification – Finding of fact – Disallowance rightly deleted by Tribunal
By K. B. BHUJLE
Advocate
For the A. Y. 2008-09, the
Assessing Officer found that the assessee did not deduct tax at source from the
payments made on account of administrative expenses which was paid by the joint
venture to the Indian company. According to the Assessing Officer section
40(a)(ia) of the Income-tax Act, 1961 (hereinafter for the sake of brevity
referred to as the “Act”) was applicable and he disallowed the
expenditure.
The Tribunal held that it did not
find any reason to sustain the disallowance u/s. 40(a)(ia) as the payments made
by the assessee to the co-venturer were only on account of salary and related
expenses.
On appeal by the Revenue, the
Bombay High Court upheld the decision of the Tribunal and held as under:
“Once the Assessing Officer had
checked the debit notes raised by the co-venturer and they were test checked
and the amount of expenditure claimed by the assessee was verified and its
genuineness had been proved, there was no reason to interfere with the findings
of fact recorded by the Tribunal in its order.”
