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| The Tax Publishers2019 TaxPub(DT) 7270 (Mum-Trib) INCOME TAX ACT, 1961
Section 194C
In line with assessee's submission that impugned payment to affiliates towards vouchers tendered by employees of assessee being in the nature of mere reimbursement were not liable for TDS under section 194C. Parameters essential for a payment to be regarded as reimbursement had not been examined by AO or further, documents which could lead to it were not been filed completely by assessee before AO . Therefore, matter was restored to AO for adjudication de novo order after giving reasonable opportunity of being heard to assessee.
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Tax deduction at source - Under section 194C - Payment to affiliates towards vouchers tendered by employees of assessee - Assessee claiming payment to be in the nature of mere reimbursement
Assessee a private limited company was authorized by Reserve Bank of India (RBI) under section 7 of Payment and Settlement System Act, 2007 to carry on the business of operating a semi-closed prepaid payment system. Assessee had been carrying on said business since the past several years, it issued printed (paper) meal vouchers to companies or other establishments (customers) having large number of employees on their rolls who purchase food items from affiliates of assessee (eating joints/restaurants/merchant establishment) by using meal vouchers as valid payment thereof. The affiliate designated restaurant/merchant establishment) accepted vouchers tendered by employees of the customer for purchase of food items as a valid mode of payment. The affiliates, after accepting vocuhers, presented the same to assessee. AO held that payment was made pursuant to a contractual agreement between assessee and affiliates, therefore, assessee was liable to deduct tax under section 194C. Assessee contended that assessee did not make any payment to affiliates, payment for the purpose of food items was made by employees of customers and assessee only 'reimbursed face value of vouchers to affiliates and there was no element of income comprised in reimbursement as income to affiliate had accrued at the point of time when sale of food had taken place.Held: Parameters essential for a payment to be regarded as reimbursement had not been examined by AO or further, documents which could lead to it were not been filed completely by assessee before AO. Therefore, matter was restored to AO for adjudication de novo order after giving reasonable opportunity of being heard to assessee.
REFERRED : Bovis Lend Lease (I) P. Ltd. v. ITO (2010) 127 TTJ 25 (Bang-Trib) : 2010 TaxPub(DT) 756 (Bang-Trib).
FAVOUR : Matter remanded.
A.Y. : 2013-14
IN THE ITAT, MUMBAI BENCH
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