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TMI Blog2008 (1) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... before us and the precedents relied upon. The assessee is a company manufacturing motor vehicles, etc. It entered into a technical assistance agreement with M/s AVL List GmbH, Austria for supply of designs, drawings and consultancy in the development of engines. As per the terms of the agreement in addition to fees for technical know-how the assessee was required to reimburse expenditure towards air fare, accommodation and subsistence cost for the personnel deputed by the Austrian firm to India. The personnel were deputed to assist the assessee in India for imparting their technical expertise. The Austrian firm raised four invoices on the assessee towards reimbursement on items of expenses. The assessee applied for a certificate for non-de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the expenses incurred which were in the nature of entertainment and travelling expenses on the ground that they were more than the permissible limit. On reference the Hon'ble High Court has held that reimbursement of expenses can under no circumstances be regarded as revenue receipt. Reference was also made to the decision rendered by the Delhi Bench 'A' of the Tribunal in the case of HNS India VSAT Inc. vs. Dy. Director of IT (2005) 96 TTJ (Del) 486 : (2005) 95 ITD 157 (Del). In this case the Tribunal held that in the facts of the case the amount paid on account of reimbursement of actual expenses incurred by sub-contractors could not be treated as income of the sub-contractors chargeable to tax in India. As such the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to say that these are not chargeable to tax. He explained the context in which the decision of the Delhi High Court in the case of Industrial Engineering Projects (P) Ltd., cited supra, was rendered and stated that the facts in the present case before us are entirely different. It was submitted that the payments in question bear a clear nexus with the technical fees. Further reliance was placed on the decision of the Hon'ble Kerala High Court rendered in the case of Cochin Refineries Ltd. vs. CIT (1996) 135 CTR (Ker) 193 : (1996) 222 ITR 354 (Ker). In this case Cochin Refineries Ltd. requested a foreign company to evaluate whether the coke produced from a blend of vacuum bottoms and clarified oil from Bombay High crude was suitable for mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the foreign company for such services was exigible to tax in India. 7. In order to invoke the provisions of s. 195 in the context of non-resident it is sine qua non that the amount payable in question must bear the taxable character. Where the person responsible for making the payment is not sure as to which part of the amount of income referred to in s. 195(2) is chargeable to tax, he can apply to the AO to determine the proportion of the sum so chargeable and on such application the AO is required to make an order determining the proportion of such income on which tax is to be deducted at source. It presupposes that the person responsible for making the payment is in no doubt that tax is payable in respect of some part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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