S. 192, 201(1), 201(1A) – Medical reimbursement paid every month

The exemption on account of Medical expenditure and leave travel is granted even if the payment precedes the incurrence of expenditure. The interpretation of the word “actually paid” is not relevant while ascertaining the quantum of tax that has to be deducted at source u/s.192 of the Act. As far as the assessee is concerned, his obligation is only to make an “estimate” of the income under the head “Salaries” and such estimate has to be a bona fide estimate. Honest and bona fide estimate of taxable salary is made in the process of deducting tax at source u/s 192. Every effort is made by the assessee to comply with the requirements of section 192. The assessee is not benefited by allowing employees to claim exemption. The order passed by the AO u/ss. 201(1) & 201(1A) is therefore bad in law. ITAT also observed that the liability of the person deducting tax at source cannot be greater than the liability of the person on whose behalf tax at source is deducted - ACIT (TDS) vs. Cisco Systems Asia Services A.Ys. 2008-09 & 2009-10 38 taxmann.com 381 (Bangalore - Trib.)