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TMI Blog2025 (5) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... owance of Rs. 1,07,51,004/- u/s. 40(a)(ia) which pertains to reimbursement of expenses made to Crisil Limited on account of non-deduction of tax at source. 3. The brief facts are that, in this case original assessment was made u/s. 143(3) vide order dated 13/03/2015, wherein, the addition of Rs. 1,07,51,004/- was made u/s. 40(a)(ia) of the Act for non-deduction of tax at source for payments made to Crisil Ltd., which was in the nature of reimbursement of expenses. 4. In the first appeal ld. CIT (A) vide his order dated 18/10/2016, deleted the said disallowance and decided the issue in favour of the assessee. Aggrieved by the said order, Revenue preferred an appeal before the Tribunal and the Tribunal vide order dated 12/02/2019 restored t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervations and addition of Rs. 32,93,383/- was directed to be deleted because it related to expenses where no TDS provision was applicable, he not only upheld the addition made by the AO but also further enhanced it by making the disallowance of Rs. 32,93,383/- without providing any opportunity or notice of hearing to the assessee. He held that even if it is a reimbursement to a parent company, TDS is deductible and disallowance has to be made. The ld. CIT (A) has not even considered that assessee has filed Form 26A before the ld. AO that the Crisil Limited has already shown it as income wherever the payment related pertain to income and therefore, in terms of proviso to Section 201, no disallowance u/s. 40(a)(ia) can be made. Ld. CIT (A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,200 Vehicle Expenses 3,036 Total 32,93,383 8. Perusal of these expenditures it can be seen that, on none of the payments, the provision of TDS would apply because they are directly incurred for the purpose of business. Nowhere, any such expenses entail provision for deduction of TDS under the Act, therefore, no disallowance can be made with respect to expenditure of Rs. 32,93,383/- which has been reimbursed by the assessee to Crisil Limited. 9. In so far as service tax component with respect to reimbursement of expenditure of Rs. 10,03,947/-, there is a CBDT Circular No.1 of 2024 dated 13/01/2014 wherein, it has been stated that no taxes are required to be deducted on the service tax component. The relevant extract of the Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income, then no disallowance can be made u/s. 40(a)(ia), the copy of Form 26A has been placed in the paper book before us at page 11-15. We find that this Form 26A was also filed before the ld. CIT(A) alongwith the submission dated 30/10/2019. Once Form 26A has been filed and Chartered Accountant has confirmed that M/s. Crisil Limited has considered the said receipts in total income and has paid the tax thereof and furnished the return of income, then no disallowance u/s. 40(a)(ia) can be made in view of the proviso to Section 201. Accordingly, the entire disallowances confirmed by the ld.CIT(A) is deleted.
12. In the result, appeal of the assessee is allowed.
Order pronounced on 9th January, 2025. X X X X Extracts X X X X X X X X Extracts X X X X
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