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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 ..... ded to treat reimbursement of expenses as incurring of expenses. CIT(A) has also stated that there is no evidence of the fact that the tax deduction at source was made by the person actually making payment of expenditure. In our considered view, this is wholly irrelevant. All that we are concerned at this stage is whether the assessee has failed to discharge his tax withholding obligation, and when the assessee has not committed any such failure, there is no question of his being visited with the consequences of such a non-existent failure. We uphold the plea of the assessee and direct the Assessing Officer to delete the impugned disallowance - Decided in favour of assessee - ITA No. 2064/Ahd/2015 (Assessment Year: 2011-12) - - - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd ₹ 2,32,868/- was debited under the head exhibition expenses domestic (indirect) . The assessee has contended that these are expenses which were incurred by the assessee towards reimbursement; somehow, learned Assessing Officer not satisfied with the explanation of the assessee and observed that assessee has made total payment of ₹ 19,32,177/-, on which it failed to deduct the TDS and, therefore, disallowance deserves to be made. 4. Appeal to the learned CIT(A) did not bring much relief to the assessee. 5. Learned Counsel for the assessee at the very outset contended that, out of total expenditures, learned CIT(A) has allowed some of the expenditures and, with respect to ₹ 12,96,125/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the learned CIT(A). 8. We have duly considered the rival contentions and gone through the record carefully. We find that in Assessment Year 2010-11 the assessee has debited the expenditure of ₹ 19,32,177/- which was incurred towards reimbursement of advertisement expenses. Learned Assessing Officer has disallowed this expenditure and the issue travelled upto the Tribunal. The Tribunal has allowed the claim of the assessee by recording the following finding:- 13. Grievance raised by the assessee-appellant is as follows:- The learned CIT(A) has erred in law and on facts of the appellant s case in confirming the action of the Learned AO of disallowing reimbursement of advertisement expense of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial on record and duly considered facts of the case in the light of the applicable legal position. 16. We find that there is no dispute that what is paid by the assessee is a reimbursement, a partial reimbursement in fact, of the advertisement and exhibition expenses. It is not in the nature of income at this stage but is only a reimbursement of expenses to the person who has actually incurred the advertisement expenses and exhibition charges. The character of payment, so far as the assessee is concerned, is simply of reimbursement of expenses. On materially similar facts, Hon ble jurisdictional High Court, in the case of CIT Vs. Gujarat Narmada Valley Fertilizers Co. Ltd, [(2014) 361 ITR 192 (Guj)], has decided the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s confirmed the order passed by the CIT(A). It is required to be noted that while confirming the order passed by the CIT(A) and deleting the disallowance, it has been specifically observed by the tribunal that in fact the expenses were incurred by the agent on behalf of the assessee for transportation and other charges, which has been spelt out in the bill itself including the commission to the agent. The learned tribunal also observed that the relation between the assessee and the agent is principal and an agent. The learned tribunal also observed that so far as the obligation to deduct tax at source from the payment of transport charges and other charges is concerned, the same was complied with by the agent, who had made payment on its be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and proceeded to treat reimbursement of expenses as incurring of expenses. 18. Learned CIT(A) has also stated that there is no evidence of the fact that the tax deduction at source was made by the person actually making payment of expenditure. In our considered view, this is wholly irrelevant. All that we are concerned at this stage is whether the assessee has failed to discharge his tax withholding obligation, and when the assessee has not committed any such failure, there is no question of his being visited with the consequences of such a non-existent failure. 19. In the light of the above discussions, as also bearing in mind entirety of the case, we uphold the plea of the assessee and direct the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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