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2019 (9) TMI 1193 - AT - Income TaxTDS on expenditure incurred towards reimbursement - addition u/s 40(a)(ia) - HELD THAT:- 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. 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
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