tax_query returning all posts instead of selective posts in WP_Query

Taxonomy Parameters

Important Note: tax_query takes an array of tax query arguments arrays (it takes an array of arrays).

This construct allows you to query multiple taxonomies by using the relation parameter in the first (outer) array to describe the boolean relationship between the taxonomy arrays.

In 'tax_query' you should add array of arrays (see in Codex):

'tax_query'    => array (
    array(
        'taxonomy' => 'project_catagories',
        'field'    => 'term_id',
        'terms'    => $term->term_id
    )
)

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