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TMI Blog2012 (10) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... atriates as fees for technical services – Non-resident assessee deputed its personnel for rendering services to Indian companies – Indian company reimburse the living allowances as per the agreement - AO included this amount in fees for technical services – Held that:- Reimbursement does not have any element of income comprised therein and hence not liable to tax. In favour of assessee - IT APPEAL NOS. 3223 & 3224 (MUM.) OF 2008 - - - Dated:- 24-8-2012 - R.S. SYAL AND I.P. BANSAL, JJ. Nitesh Joshi for the Appellant. Narendra Kumar for the Respondent. ORDER R.S. Syal, Accountant Member - These two appeals by the assessee relate to the assessment years 2003-2004 and 2004-2005. Since some of the issues raised in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Relying on certain decisions, the A.O. held that : "the amount of Rs. 1,24,06,210 which is the reimbursed travel expenses by HME and HCE to the assessee company is treated as fees for technical services and charged to tax @ 10%". The learned CIT(A) approved the action of the Assessing Officer. 3. Having heard the rival submissions and perused the relevant material on record, we find from the Agreement between the assessee and HME, a copy of which is available on page 8 onwards of the paper book, that the assessee undertook to provide personnel for rendering technical services at the prescribed rates of Euro 1,200 per day for Senior Manager, Euro 1,000 per day for Senior Engineer and Euro 900 per day for Engineer. Clause 7 of the agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HME. This cost of travel is not included in, and is over and above, the rates defined in paragraph 3 above." 5. The details of total travelling expenses incurred by the assessee and then reimbursed by HCE is available on page 88B of the paper book. From the above clauses of the agreement, it is amply clear that the travelling expenses borne by HME and HCE are distinct from the fees for technical services as stated in the other relevant clauses of this agreement. Such fees totalled to Rs. 54.55 crore which the assessee offered as fees for technical services. Insofar as the reimbursement of travel expenses is concerned, it is found that the same represents the actual amount spent by the assessee on sending the personnel to India for renderi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerns for a specified fees which amount was offered for taxation. The amount in question received by the assessee from HME and HCE without any element of profit is reimbursement of traveling expenses incurred by the assessee's personnel for rendering technical services in India. 6. The Hon'ble jurisdictional High Court in the case of CIT v. Siemens Aktiongesellschaft [2009] 310 ITR 320 has held that reimbursement of expenses is not liable to tax. Similar view has been reiterated in DIT (International Taxation) v. Krupp Udhe Gmbh [IT Appeal No. 2626 of 2009, dated 9-3-2010]. It is further interesting to note that the Assessing Officer in the draft assessment order for the assessment year 2006-2007 included reimbursement of traveling expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer included this amount in fees for technical services and assessed it accordingly. No relief was allowed in the first appeal. 10. Having heard the rival submissions and perused the relevant material on record, here again it is found that the living allowance has been directly paid by HME and HCM, to the technicians etc. deputed by the assessee for rendering services to these two companies. Technical fees as set out in the agreements with HME and HCE is independent of this amount. It is further relevant to note that the Dispute Resolution Panel in the above referred order has also held that the amount of living allowance cannot be charged to tax in the hands of the assessee for assessment year 2006-2007. That being the posit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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