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TMI Blog2016 (6) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... these items are not taxable in the hands of the assessee. However, we notice that the Tribunal has held so in AY 2003-04 and 2004-05 on the understanding that the assessee herein and Indian companies are not related parties. The Ld D.R has pointed out that they are related parties, which fact was not disputed by the assessee. We have noticed that the addition made by the assessing officer has been deleted by DRP in AY 2006-07 and 2007-08. Identical additions made in AY 2003-04 and 2004-05 have also been deleted by the Tribunal, even though there was misunderstanding about the facts. But the fact remains that the order of the Tribunal passed for AY 2003-04 and 2004-05 remains in operation as of now. We are dealing with AY 2005-06, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its employees to the group companies stated above for carrying out certain works. As per the agreement entered into between the assessee and the companies cited above, Indian group Companies are required to reimburse travelling expenses of the personnel and also they are required to give living allowance to those personnel. The assessee did not consider those payments as its income and accordingly did not offer them also in its return of income. The Assessing Officer, however, held that both the above said amounts should taken as forming part of fee for services received by the assessee and accordingly held that they are liable for taxation. For the sake of convenience we extract below relevant observations made by the Assessing Officer:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces or traveling charges of the employees who would rendered the services. 4.7 It has been held in the case of Cochin Refineries Ltd. ( 222 ITR 354) by the Kerala High Court that the services rendered by the foreign company which were in the nature of technical services and the nature of reimbursement of payments made to the personnel, no different situation would be available because these payments would be part and parcel in the process of advise of a technical character and would fall for coverage within the meaning of Explanation to section 9(1 )(vii) of the Income-tax Act, 1961. 4.8 It has been held in the case of Clouth Gummiwerke Aktiengesellschaft Vs. CIT (Andhra Pradesh)(238 ITR 861) in which it has held that the fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Furthermore, there in the absence of the global accounts of the assessee it is not possible to verify whether the alleged reimbursements are in fact expenses which have been actually paid by the assessee and are not income. 10. In view of the above, it is not possible to accept the contention of the assessee that the amount received by it in the nature of reimbursement of costs or as living allowance of the employees cannot be treated as part of the Fees for Technical Services received by it from the Indian concerns. The decisions, on which the assessee has relied upon in its submissions, do not help the assessee's case as they are distinguishable on facts. Therefore, the amount of ₹ 38,46,666 as reimbursement of travel exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the nature of income and the same is not liable to tax. Further, the Dispute Resolution Panel for assessment year 2006-07 and 2007-08, in appellant's own case has held that as the payments made directly to the expatriates cannot be disallowed relying on the decisions of the Bombay high Court in the case of Krupp Udhe GMBH and Siemens Aktiongesellschaft. Therefore, the Assessing Office may be directed to delete the addition on this issue. 6.4 After carefully examining the legal position on this issue, I am of the view that this is a covered issue in view of the judgment of the Hon'ble Mumbai High Court in the case of CIT v. Siemens Aktiongesellschaft [2009] (310 ITR 320)(Bom), therefore, the Assessing Officer is directed to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court has held in the case of Centrica India Offshore (364 ITR 336) has held that the salary paid to expatriates shall be taken as part of fee for services. Accordingly he submitted that the splitting up of the fees into several components like Fees, living allowances and reimbursement of expenses should be ignored and entire receipts should be taken as forming part of fees only. 6. On the contrary, the Ld A.R submitted that the DRP has held in the subsequent years that these two items cannot be considered to be the receipts of the assessee. He submitted that the contract entered by the assessee with the Indian Companies provided that the travelling expenses of the expatriates shall be borne by the Indian Companies. Further th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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