No TDS on reimbursement of expenses to Sister concern on Cost basis

ITO Vs Vishinda Diamonds (ITAT Mumbai)

Sister concern made purchases of rough diamonds on behalf of assessee. Sister concern made payment of core service charges to vendor after deducting tax at rate of 15 per cent as per article 13 of the India-UK DTAA. Assessee reimbursed expenses to sister concern. HELD, There was no element of margin or profit or value addition by sister concern, therefore no TDS was required to be made at time of payment by assessee to sister concern. The original payment was made by the sister concern of the assessee on behalf of the assessee and subsequently the assessee has reimbursed the amount to the sister concern. Thus, once the TDS was deducted by the sister concern and deposited to the Government account, then no subsequent TDS is required to be deducted on the same amount. 

FULL TEXT OF THE ITAT JUDGEMENT

The ITA No.2018/Mum/2010 and ITA No.1949/Mum/2011 are two appeals against the same order dated 30.12.2009 of the CIT(A) arising from the order passed u/s 201(1) and 201(1A) of the I T Act for the Assessment Year 2006-07.

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