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TMI Blog2013 (7) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... reimbursement. These were never claimed as expenditure by the assessee and once the assessee has not claimed the expenditure qua this reimbursement, the assessee is not liable to tax deduction at source under section 194C of the Act. Further, the Assessing Officer has wrongly made disallowance by holding that the expenses incurred are not for the purpose of business rather according to him, these are inflated expenses booked by the assessee. This finding of the Assessing Officer is erroneous for the reason that the payments made of reimbursement of expenses are purely for business expenses. - CIT(A) rightly deleted the addition - Decided against Revenue. - ITA No.766/Kol /2011 - - - Dated:- 11-7-2013 - Shri, N.S. Saini and Shri Mahavir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We have heard rival contentions and gone through the facts and circumstances of the case. We find that the Assessing Officer received information from the Income-tax Officer, Ward-6(3) Kolkata, that the assessee made contractual payments of ₹ 1,45,14,602 as per tax deducted at source (TDS) return but no tax is deducted on the payment of ₹ 72,83,181. This information came to the Assessing Officer of the assessee after the Assessing Officer, Ward-6(3) Kolkata, informed him. The assessee of that Assessing Officer, claimed that the amount of ₹ 72,83,181 relates to payments of reimbursement made by the assessee to the agent. But the Assessing Officer noted that as per section 194C of the Act, these payments fall under the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding this amount of ₹ 72,83,181 which was reimbursed. These reimbursement charges were already included in the total freight and it was claimed by the assessee. But the Assessing Officer was not convinced by the reply then he made disallowance. 4. Aggrieved, the assessee preferred appeal before the Commissioner of Income-tax (Appeals), who after considering the submissions of the assessee deleted the addition vide paragraphs 4.1 and 4.2 of his order, which are reproduced as under : 4.1 I agree with the submission of the appellant that clause (b) of section 22(1A) of the Companies Act, 1956 required the auditor to inquire and report about transaction of the company which repre sented merely by book entries. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in pursuance of agreement for supply of trucks are merely reimbursement. The assessee has claimed total freight charges at ₹ 1,45,14,602 including this amount of reimbursement of ₹ 72,83,181 and the assessee has already deducted the tax at source under section 194C of the Act on contractual payment of freight, i.e., total freight at ₹ 1,45,14,602 and nothing is to be deducted from reimbursement. These were never claimed as expenditure by the assessee and once the assessee has not claimed the expenditure qua this reimbursement, the assessee is not liable to tax deduction at source under section 194C of the Act. Further, the Assessing Officer has wrongly made disallowance by holding that the expenses incurred are not for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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