INCOME TAX ACT, 1961

Section 40(a)(ia)

Business disallowance under section 40(a)(ia - Non-deduction of tax at source - Payment being reimbursement of expenses met by third party on behalf of assessee -

Assessee company incurred harbour expenditure of Rs. 21,60,162. The said expenditure was paid by Trimex Minerals (P) Ltd., to Chennai Port Trust on behalf of the assessee company for export of iron ore. Assessee reimbursed harbour charges to Chennai Port Trust as per debit note issued by them. AO disallowed harbour expenditure under section 40(a)(ia), for non-deduction of TDS.Held: Trimex Minerals (P) Ltd., incurred barbour expenditure on behalf of assessee and paid harbour expenditure to Chennai Port Trust for export of iron ore. The assessee filed copies of debit notes issued by M/s. Trimex Minerals (P) Ltd., along with ledger extract, and also confirmation from the parties where the party categorically confirmed a sum of Rs. 21,60,162 was paid to Chennai Port Trust. Thus, harbour expenditure was reimbursement of expenses and, therefore, same could not be disallowed under section 40(a)(ia) for non-deduction of tax.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

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