Suraj R. Agrawal
Brief of the Case
Delhi High Court in the case of CIT vs. DLF Commercial Project Corp held that There is no obligation to deduct TDS on amounts paid as “reimbursement of expenses” because it do not have the character of income.
A) Facts of the case:
a. Assessee is in the business of developing land for commercial, residential, retail, industrial parks, information technology parks, SEZ, etc.
b. During AY 2007-08, the assessee filed its return reporting an income of ₹1,67,95,360.
c. AO added a sum of ₹ 19,09,83,236/- under Section 40(a)(ia) of the Act for non-deduction of TDS on reimbursement expenditure paid to M/s DLF Land Ltd.
d. The latter entity had deducted TDS on the payments made by it as a facilitator on behalf of the assessee.
e. CIT(A) & ITAT ruled in favour of the assessee and deleted this amount.
f. The assessee entered into an agreement dated 01.04.2007 with the said company to carry out activities like maintenance of books of accounts and getting the accounts audited, maintenance of secretarial records, filing with various statutory authorities etc. M/s DLF Land Ltd. was entitled to service charges @ 5% of the total expenditure incurred.
B) Issue put before Delhi High Court:
Did the Income Tax Appellate Tribunal (ITAT) fall into error in its findings with respect to the addition on account of reimbursement of interest within Section 40(a)(ia) on the issue of non-deduction of TDS on the payments made on reimbursement of service charges?
C) Contentions of Appellant:
