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2010 (5) TMI 841 - AT - Income TaxAddition u/s 40(a)(ia) - Disallowance on payments made to parent company - reimbursement of expenses - TDS was not deducted as per provisions of section 40(a) - HELD THAT:- We find that the facts are not in dispute inasmuch as the payment was made to parent company M/s. J.B. Boda & Co. Pvt. Ltd. as payment of reimbursement expenses on the basis of cost sharing arrangement. This arrangement was entered into for more effective cost management. The common expenses are incurred for and on behalf of everyone in the group. All the group companies reimbursed the expenses to M/s. J.B. Boda & Co. Pvt. Ltd. on an equitable basis determined in earlier years by the management consultant. There is no material on record to show that the assessee has made payments to the contractor or sub-contractor or actual service provider. Therefore, the payments made to M/s. J.B. Boda & Co. Pvt. Ltd. do not fall within the purview of section 40(a)(ia). In the absence of any distinguishing feature brought on record by the revenue, we hold that the assessee is not liable to deduct TDS on the reimbursement of expenses and accordingly we are inclined to uphold the finding of the ld. CIT(A) in deleting the disallowance made by the AO. ''The ld. CIT(A) while observing that the expenses reimbursed by the group company to the flagship company does not constitute income in the hands of the later and does not partake the nature of commission, held that there is no liability to deduct tax on part of the appellant company and accordingly deleted the disallowance made by the AO.'' The grounds taken by the revenue are therefore, rejected.
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