SUNITA NARESH YADAV,NAVI MUMBAI vs. ITO 22(3)(4), VASHI

This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order Commissioner (Appeals) – 33, Mumbai and arises out of order u/s 143(3) of the Income Tax Act, 1961 (the ‘Act’).

The grounds of appeal filed by the assessee read as under: -

Briefly stated, the facts of the case are that the nature of business of the assessee is that a clearing and forwarding agency. The Assessing Officer (A.O.) on perusal of the profit and loss account found that the assessee had not made TDS on freight charges paid to Shanti Enterprises amounting to Rs.10,82,905/-. In response to a query raised by the A.O., the assessee submitted that the amount paid in the form the re-imbursement expenses is not liable to TDS. However, the A.O. was not convinced with the above explanation of the assessee. The A.O. relied on the CBDT Circular No. 715 dated 08.08.1995 wherein it is clarified vide answer to question number 30 that section 194C and 194J refer to any sum paid, therefore, the imbursement cannot be deducted out of the bill amount for the purpose of tax deduction at source. Thus, if a consolidated bill is given by professional/consultant for his fees as well as out of pocket expenditure, then the entire amount is subject to TDS. Therefore, the A.O. made a disallowance of Rs.10,82,906/- u/s 40(a)(ia) of the Act.

Aggrieved by the order of the A.O. the assessee filed an appeal before the Ld. CIT(A). We find that the Ld. CIT(A) dismissed the appeal filed by the assessee after perusing the invoices that the assessee had made payments on account of freight charges / agency charges, however, the said invoices were not supported by documentary evidence. 5. Before us, the Ld. Counsel of the assessee files copy of invoice of re- imbursement expenses. He also relies on the decision in the case of Mamata Machinery Pvt. Ltd. vs. DCIT (2013) 37 CCH 0376 Ahd Trib and DCIT vs. Dhaanya Seeds Pvt. Ltd. (2013) 37 CCH 0411 Bang Trib. 6. On the other hand, the Ld. DR relies on the order passed by the Ld. CIT(A). 7. We have heard the rival submissions and perused the relevant material on record. In ordinary parlance, re-imbursement means re-payment of what has been spent. To re-imburse is to re-pay what is expended. In Tata Iron & Steel Co. Ltd. vs. Union of India (2001) 2 SCC 41, para 16, it is explained that the word ‘re-imbursement’ means and implies restoration of an equivalent for something paid or expended. We find that the bills and the related documents would only clarify the issue in the instant appeal. Neither the A.O. nor the Ld. CIT(A) has examined the same. In view of the matter, we set aside the order of the Ld. CIT(A) and restore it to the file of the A.O. to pass an order as per our observations made here-in-above after giving a reasonable opportunity of being heard to the assessee. The assessee is directed to file before the A.O. the concerned bills and related documents.

In the result, the appeal is allowed for statistical purposes.