CIT Vs. OCB ENGINEERS

JUDGEMENT

(1.) OFFICE objections waived. In this appeal by the revenue for assessment year 2007 -08 following questions of law have been raised for our consideration.

(2.) SO far as question (a) is concerned, the respondent assessee was inter -alia engaged in the business of execution of contracts for erection and commissioning of plants. The assessing officer disallowed an amount of Rs. 16.86 lacs paid by way of reimbursement to sister concerns for payment of salaries to their employees as they were deputed to the respondent assessee. This was disallowed under section 40(a)(ia) of the Income tax Act, 1961 ('the Act') for failure to deduct tax. In appeal, the CIT (A) upheld the order of the assessing officer. On further appeal the Tribunal by the impugned order has rendered a finding of fact that the payments made by the respondent assessee to its sister concerns was reimbursement for the salaries of the employees who have been deputed by the sister concerns to work with the respondent assessee. The impugned order records that it is not the case of the revenue that the assessee had made any payment for consideration extraneous to the cost of the employees deputed to the assessee nor is there any allegation that the amounts paid to its sister concerns were over and the above the salaries due to the employees. In the circumstances, the Tribunal concluded that the expenditure was incurred for salaries and thus no occasion to invoke section 40(a)(ia) of the Act can arise. Since the decision of the Tribunal is essentially based on a finding of fact we see no reason to entertain question (a).

(3.) SO far as question (b) is concerned, Counsel for the revenue states that question (b)is facet of question (a) which we have already discussed. In view of the above question (b) does not arise independently for our consideration.