2014 (6) TMI 771

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..... 1.1 The C.I.T.(Appeals) erred in not appreciating that no deduction of TDS is to be done on amounts, which are in the nature of pure reimbursement. Hence, disallowance of the said amount u/s.40(a)(ia) is bad in law. 2. The C.I.T.(Appeals) erred in confirming the disallowance of an amount of Rs.6,27,550/- being the estimated disallowance of freight charges i.e, 10% of Rs.62,75,538/-. 3. The C.I.T.(Appeals) erred in confirming the disallowance to the extent of l/10lh (Rs.41,440/- of the aggregate claim) of total expenses of Rs.4,14,425/- on the pretext of it being expenses being personal nature." 3. First ground relates to addition of Rs. 61,22,877/- made by AO invoking the provisions of section 40(a)(ia) of the Act for the paym....

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.... C & F agent towards agent charges for the services given to the assessee and the other towards reimbursement of expenses which were undertaken by the agency on behalf of the assessee. The TDS was duly deducted on the agency charges. On the payment towards reimbursement expenses no TDS was deducted. For this non-decution of tax provision of section 40(a)(ia) are not attracted in view of the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Gujarat Narmada Valley Fertilizers Co. Ltd reported in 361 ITR 192 which has been followed by the Hon'ble Tribunal in the case of Prayas Engineering Ltd vs. ACIT vide ITA Nos. 2825/Ahd/2010 & 2826/Ahd/2010 dated 29/04/2014 Concluding his argument learned counsel of the assessee submitte....

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....ion of the Hon'ble Jurisdictional High Court in the case of CIT vs Gujarat Narmada Valley Fertilizers Co wherein on similar facts hon'ble High Court has held that no part of amount reimbursed was to be disallowed u/s. 40(a)(ia) if tax has not been deducted which is clear from the head notes of judgment which reads as under- "Section 40(a)(ia) of the Income-tax Ad, 1961-Business disallowance-Interest etc., paid to resident without deduction of tax [Reimbursement to expenses]-Expenses were incurred by agent on behalf of assesses -principal for transportation and other charges, which had been spelt out in bill itseIf- So far as obligation to deduct tax at source form payment of transport charges and other charges was concerned, same....