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2023 (6) TMI 268 - AT - Income TaxTDS u/s 195 - Disallowance of reimbursement of mobilization and demobilization expenses - HELD THAT:- Delhi High Court [2010 (3) TMI 167 - DELHI HIGH COURT] has clearly and categorically held that the assessee was not liable to deduct tax at source u/s 195(1) in respect of mobilization and demobilization costs reimbursed to the holding company, hence, cannot be treated as assessee in default. Further observations of the Delhi High Court - “The assessment proceedings in VOAMC are reopened and the final view taken is that the VOAMC is assessable to tax, the assessee herein would also be treated as assessee in “default”, which would attract the consequence provided under section 40(a)(i).” has been quashed and set aside by the Hon’ble Supreme Court [2023 (5) TMI 586 - SC ORDER]while deciding the SLP filed by the assessee.. Thus, as on date, in view of the observations of Hon’ble Delhi High Court and Hon’ble Supreme Court, there was no legal obligation u/s 195(1) on the assessee to deduct tax at source under section 195(1) of the Act on the reimbursement of mobilization and demobilization cost to the holding company (VOAMC). That being the case, the disallowance made under section 40(a)(i) being unsustainable, is hereby deleted. Decided in favour of assessee.
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