The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has remanded the matter back to the Assessing Officer in the case of addition of reimbursement of salary to the seconded employee under section 40(a)(ia) of Income Tax Act.
The appellant, HCC Samsung Joint Venture, is a joint venture formed between M/s Hindustan Construction Company Ltd. (HCC) and Samsung C & T Corporation to execute the design and construction of tunnels as part of the Delhi MRTS Project of Delhi Metro Rail Corporation. The appellant filed its return of income based on one set of audited financial statements reporting a claiming a loss of ₹24,31,31,346/-.
During the scrutiny assessment, the Assessing Officer made a disallowance of Rs. 5,65,933/- under section 40(a)(ia) for non-deduction of tax at source, on reimbursement of salary of deputed staff paid to a sister concern, Alphine Samsung HCC Joint Venture. On appeal, the CIT(A) sustained the addition. Hence, the aggrieved appellant filed an appeal before the ITAT.
The counsel for the appellant submitted that there was no employer-employee relationship between employee and appellant and the assessee was reimbursed on a cost-to-cost basis. It was further submitted that tax was deducted at source u/s 192 of the Act by the employer M/s Alphine Samsung and taxable in the hand of salaried employees. Further, the counsel for the appellant expressed the willingness to file necessary evidence to support that tax was duly deducted on the salary paid to the seconded employee Mr. Srivastav.
The Coram of Mr. Aby T Varkey (Judicial Member) and Mr. Om Prakash Kant (Accountant Member) has been restored to the file of the Assessing Officer for verification, of whether tax has been deducted by the employer M/s Alphine Samsung HCC JV in respect of salary amount reimbursed by the assessee about employee Mr. Srivastav or tax has already been paid by the seconded employee on reimbursement amount.
Mr. H.P. Mahajani and Mr. Kailash Kanojia appeared on behalf of the appellant and respondent respectively.
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