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TMI Blog2019 (9) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred in confirming the disallowance of advertisement expense of Rs. 14,15,038/- which was disallowed by the Assessing Officer with the aid of Section 40(a)(ia) of the Income-tax Act on account of non-deduction of TDS. 3. The brief facts of the case are that the assessee has filed its return of income electronically on 23.09.2011 declaring total income at Rs. 33,18,890/-. The case of the assessee was selected for scrutiny assessment and notice under Section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the Assessing Officer that the assessee has debited the expenditure on account of advertisement etc. He has reproduced the details of such payments on page nos. 5 & 6 of the assessment order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in appellant's own case for AY 2010-11. In the appellate order passed on 22.08.2013 in appeal No. CAB/III-258/12- 13, it has been held that the appellant was required to make TDS on these payments. Following the same, in the current year also the appellant's contentions are rejected and the disallowance of these expenses u/s 40(a)(ia) is upheld." 6. Learned Counsel for the assessee further contented that in assessment year 2010-11 the dispute was travelled upto the Tribunal in ITA Nos. 2446 & 2907/Ahd/2013 and this issue was decided in favour of the assessee and the disallowance was deleted. She also placed reliance on the order of the tribunal dated 24.04.2018 in the aforesaid case. 7. On the other hand, learned Departmental Represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee ought to have deducted tax at source from these payments but the assessee has not done so. As a corollary to this finding, the Assessing Officer proceeded to disallow the said expenses which aggregated to Rs. 19,32,177/-. Aggrieved, assessee carried the matter in appeal before the ld. CIT(A) but without any success. The CIT(A) initially did not even deal with this grievance of the assessee. When assessee pointed it out by way of a rectification petition, learned CIT(A) dealt with the matter on merits but rejected the grievances anyway - this time on merits. The assessee is not satisfied and is in further appeal before us. 15. We have heard the rival contentions, perused the material on record and duly considered facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) observed that the said amount was towards the reimbursement of the expenses to the consignment agent, which was in fact incurred on behalf of the assessee and there was no profit element. The CIT(A) held that the assessee was not required to deduct the TDS on such reimbursement and, therefore, the Assessing Officer was not justified in making the above disallowance and accordingly directed to delete the same. Being aggrieved and dissatisfied with the order passed by the CIT(A) in holding the above the appellant-revenue preferred appeal before the Income Tax Appellate Tribunal and by the impugned order the Income Tax Appellate Tribunal has confirmed the order passed by the CIT(A). It is required to be noted that while confirming the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present appeal. Hence, the present appeal deserves to be dismissed and is accordingly dismissed." 17. Quite clearly, reimbursements of expenses do not require tax deduction at source. The tax deduction liability arises only at the point of time when payment is "for carrying out any work in pursuance of a contract" for the specified purposes. The payment, in the present case, is not for carrying out any work of the specified nature but only a partial reimbursement of such a payment of specified nature. The distinction is subtle and significant. The lower authorities clearly lost sight of the above aspect of the matter, and proceeded to treat reimbursement of expenses as incurring of expenses. 18. Learned CIT(A) has also stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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