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The provisions of section 194C of the Act were not applicable to the reimbursement of actual expenses and the assessee was not liable to deduct tax at source from such reimbursement. Accordingly, Tribunalset aside the orders of the Income-tax authorities and direct the A.O. to verify the claim of the assessee in the light of ourabove observation.

Shanti Prime Publication Pvt. Ltd.

Section 40(a)(ia) & 194C of the Income-tax Act, 1961—Deductions of tax at source—Provisions of section 194C not applicable to reimbursement of actual expenses.

Facts: Assessee debited Rs. 2,48,39,356 for petrol and diesel expenses paid. The assessee also shown petrol and diesel expenses collected amounting to Rs. 2,42,41,856. According to AO the assessee himself has debited TDS on payment of Rs. 2,48,39,356 paid for petrol and diesel expenses, however, AO disallowed the amount of Rs. 2,42,41,856 by invoking the provisions of section 40(a)(ia) , since it is in the nature of contract receipts and contract payments for which the assessee was liable to deduct TDS. In first appeal, CIT(A) confirmed the disallowance made by AO. Being aggrieved, assessee went on appeal before Tribunal.

Held, that it is observed that as agreed by and between assessee and the cab owners, a vehicle was to be provided by the assessee to the parties and thus, the assessee was to bear the vehicle expenses actually incurred by the said cab owners and which will be reimbursed by the parties concerned. If bills for such expenses incurred by the said cab owners were separately raised by them on the assessee in addition to bills for hire charges and since the amount of bills so raised was towards the actual expenses incurred by them, there was no element of any profit involved in the said bills. It was thus a clear case of reimbursement of actual expenses incurred by assessee and the same, therefore, was not of the nature of payment covered by section 194C requiring the assessee to deduct tax at source therefrom, where bills were raised separately by the cab owners for reimbursement of actual expenses incurred by them. As such, considering all the facts of the case, we are of the view that the provisions of section 194C were not applicable to the reimbursement of actual expenses and the assessee was not liable to deduct tax at source from such reimbursement. Accordingly, we set aside the orders of the Income-tax authorities and direct the AO to verify the claim of assessee. - SINGONAHALLI CHIKKAREVANNA GANGADHARAIAH V/s ASSTT. CIT - [2020] 182 ITD 006 (ITAT-BANGALORE)

The provisions of section 194C of the Act were not applicable to the reimbursement of actual expenses and the assessee was not liable to deduct tax at source from such reimbursement. Accordingly, Tribunalset aside the orders of the Income-tax authorities and direct the A.O. to verify the claim of the assessee in the light of ourabove observation.

Shanti Prime Publication Pvt. Ltd.

Section 40(a)(ia) & 194C of the Income-tax Act, 1961—Deductions of tax at source—Provisions of section 194C not applicable to reimbursement of actual expenses.