As  per  terms of agreement between the parties, the assessee shall borne all applicable taxes on interest payment to the lenders. As per terms of agreement, the assessee has grossed up interest payment towards TDS paid on said interest and remitted into Govt. account and also debited withholding tax to the profit & loss account.  Tribunal held that  withholding tax paid by the assessee to the Govt. account on behalf of the lenders in terms of agreement between the assessee is nothing, but cost of borrowings (interest to the assessee) and thus, the assessee is entitled to claim deduction for said withholding tax u/s.37(1) of the Income Tax Act, 1961. However, fact remains that although, the assessee claims to have filed all details, but the Assessing Officer observed that the assessee does not furnish any evidence to substantiate its claim. Matter was remanded  to the file of the Assessing Officer and directed  the Assessing Officer to examine claim of the assessee in light of agreement between the parties. In case, claim of the assessee is correct, then the Assessing Officer is directed to delete addition made towards withholding tax u/s.40(a)(ii) of the Act. (AY. 2011-12)