Pune Tribunal disallows expense on which no TDS was deducted as the taxpayer claimed it as reimbursement of expense

Last updated: 16 November 2021
Quick Summary
The Pune Tribunal has ruled that expenses claimed as reimbursement by a non-resident assessee are taxable if no Tax Deducted at Source (TDS) was applied. The Tribunal clarified that for a payment to be considered a true reimbursement, the benefit of the expenditure must be passed on directly and without alteration to the other party. In this case, the assessee could not adequately prove that IT license costs recharged to its Indian affiliate met these criteria, leading to the disallowance of the expense claim and its taxability.

Court :
Pune Tribunal

Brief :
Pune Tribunal disallows expense on which no TDS was deducted as the taxpayer claimed it as reimbursement of expense. The Tribunal opines that a shall be called as a reimbursement only when undiluted benefit, flowing from the incurring of expenditure is passed on, as such, to the other.

Citation :

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