Case Law Details
Pr. CIT Vs DLF Commercial Projects Corporation (Delhi High Court)
Neither the provisions of section 194C nor section 194J obliges the person making the payment to deduct anything from contractual payments such as those made for reimbursement of expenses, other than what is defined as “income”. The law thus obliges only amounts which fulfil the character of “income” to be subject to TDS in such cases; for other payments towards expenses, the deduction to those entitled (to be made by the payeee) the obligation to carry out TDS is upon the recipient or payee of the amounts.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
The Revenue in these appeals questions the concurrent findings of the lower appellate authority for assessment years (AY) 2009-10 and 2010-11.
2. The assessee is engaged in the business of development of land and colonies. As a part of its commercial activities, it entered into contracts with M/s. DLF Land Limited, a sister concern. The latter is tasked with the responsibility of rendering certain services towards procurement of land, and carrying out secretarial, administrative and inventory management activities like maintenance of books of accounts, getting accounts audited, maintenance of secretarial records, filing of various statutory returns, managing bank accounts, taking steps towards obtaining license relating to land from various statutory authorities etc. The agreements entered into by the assessee entitled it to service charge @ 5% of total expenditure incurred. Besides that, the concern was also entitled to full reimbursement of expenses claimed. The amount paid for the concerned assessment years, i.e., Rs. 25,11,78,222 for assessment year 2009-10 and Rs. 7,42,47,543 for assessment year 2010-11 were disallowed by the assessing officer (AO). It was held that the reimbursement of service charges were not properly accounted for. Commissioner (Appeals) and ITAT, however, granted relief on the ground that the agreements which were produced before the lower authorities and the invoices raised were sufficient evidence to justify the claim of the assessee.
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