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2019 (10) TMI 1066 - AT - Income TaxTDS u/s 194C - obligation to deduct tax at source on the reimbursements made by it to its Affiliates - HELD THAT:- The appellant claims it as reimbursements, whereas the revenue disputes it. Therefore, it would be pertinent to examine below the co-ordinates of ‘reimbursements’. In Bovis Lend Lease (I) P. Ltd. v. ITO [2009 (8) TMI 853 - ITAT BANGALORE] it is observed that the following parameters are essential for a payment to be regarded as reimbursement:- (a) The actual liability to pay should be of the person who reimburses the money to the original payer. (b)The liability should be clearly determined, it should not be an approximate or varying amount. (c)The liability should have crystallized. Reason given that payments that were never required but were made just avoid a potential problem may not qualify. (d)There should be a clear ascertainable relationship between the paying and reimbursing parties. Therefore, reimbursement by an unconnected person may not qualify. (e)The payment should first be made by somebody whose liability it never was and the repayment should then be made to that person to square off the account. (f)Three parties should exist in a case of reimbursement-a payer, a payee and a reimburser (i.e. the person reimbursing the amount of the payer). Further it is well settled that the basic ingredient is that there is no profit element in the amount reimbursed. Some examples of documents to be considered in the context of transactions involving ‘reimbursements’, which are Written agreement between the parties, Invoices or debit notes raised by the parties and Agreement entered by lead company with third parties and invoices raised by the third parties towards reimbursable expenses incurred by the lead company. Having examined the materials available on record, we find that the parameters as mentioned above have not been examined by the AO or the CIT(A). Further, it is observed that the documents which could lead to it have not been filed completely by the appellant before the AO or the Ld. CIT(A). Therefore, we set aside the order of the CIT(A) and restore the matter to the file of the AO of make a de novo order after giving reasonable opportunity of being heard to the appellant. We direct the appellant to file the relevant documents/evidence before the AO. - Decided in favour of assessee for statistical purposes.
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