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TMI Blog2018 (11) TMI 1777X X X X Extracts X X X X X X X X Extracts X X X X ..... struck down. Without prejudice to the foregoing; 2: 0 Re.: Treating the reimbursement of the travel expenses as income for the year- Rs. 65.44.883/- 2 : 1 The Assessing Officer / the Dispute Resolution Panel has erred in confirming the treatment of travel amounts reimbursed to the Appellant by GIA India Laboratory P. Ltd., as the income of the Appellant for the year. 2:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the travel expenses reimbursed to it cannot be treated as its income and the stand taken by the Assessing Officer / the Dispute Resolution Panel in this regard is illegal, incorrect, erroneous and misconceived. 2:3 The Appellant submits the Assessing Officer be directed to delete the addition so made by him and to re-compute its total income accordingly. 3:0 Re.: General: Appellant craves leave to add, alter, amend, substitute and / or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. 3. Rival contentions have been heard and record perused. 4. At the outset, learned AR placed on record the order of the Tribunal in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the Tribunal in assessee's own case for assessment year 2009-10 and 2011-12, however, it observed that the Tribunal has not addressed the issue as to whether the gross amount relatable to services rendered by the assessee can be bifurcated for purpose of computing tax on gross basis. The DRP observed, while arriving at its decision, in respect of non-taxability of reimbursement of cost the Tribunal has not dealt with the issue as to whether the amount is clearly in the nature of reimbursement or not. Referring to certain judicial precedents, DRP observed that when the assessee itself admits that the amount of fee for technical services are liable to tax in India on a gross basis as per Article-12 of the India-USA Double Taxation Avoidance Agreement (DTAA), if during the course of rendering such services certain costs have been incurred which have been reimbursed, it has to be included in the receipts of the assessee as taxability of such receipts has to be considered on a gross basis. According to the DRP, it is not material whether a portion of the cost does not have an income element. Thus, ultimately, the DRP upheld the addition made by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and technical service agreement with GIA India on 1 st November 2008, for training the employees of GIA India and providing technical services for the implementation of grading policies, procedures and processes. It is also not disputed that in pursuance of such agreement, the assessee has raised separate debit notes for fee for training and technical services and towards reimbursement of certain costs like travel expenses, meals, etc. While it is the claim of the assessee that the reimbursement of cost of travel and meals by GIA India is on actual basis without any profit element, hence, not to be included in the income, it is the stand of the Department that there is no scope for bifurcation of the amount received by the assessee under the agreement, as it has to be taxed on gross basis as fee for technical services. There is no dispute that the agreement under which the assessee has received the disputed amount is continuing from assessment year 2009-10. While deciding identical dispute in assessee's own case for assessment year 2009-10 and 2011-12, in ITA no.4659/Mum./2014 and ITA no.385/Mum./2016, dated 9 th May 2017, the Tribunal has held as under:- "8. We have go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that whole of the amount including the amount reimbursed aggregating to Rs. 1,26,09,523 should also be included as fees in the hands of the assessee. 11. We have carefully considered the orders passed by the lower authorities and we do not agree with the stand adopted by the lower authorities. It may be noted from the perusal of the terms of the agreement which are reproduced above that assessee was entitled to receive by way of fee only the amount incurred by way of cost to "employ‟ the individuals plus mark-up of 6.5%. Clearly speaking, the expression cost to "employ‟ individuals is different from the expression cost incurred to "depute‟ a person. The cost of employment would clearly mean and include only internal costs as are incurred by an organisation to employ an individual in the organisation. Any cost incurred over and above that to depute the individual for a particular assignment which is not internal assignment of the assessee would be additional cost. Thus, in the case before us, costs and expenses incurred by the assessee on travel and insurance etc on the persons deputed in India for providing training and technical services to GIA India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , thus, integral part of the international shipping business of the assessee and runs on a combination of mainframe and non-mainframe servers located in Denmark. Expenditure which is incurred for running this business is shared by all the agents. In this manner, the systems enable the agents to coordinate cargos and ports of call for its fleet. 11. Aforesaid are the findings of facts. It is clearly held that no technical services are provided by the assessee to the agents. Once these are accepted, by no stretch of imagination, payments made by the agents can be treated as fee for technical service. It is in the nature of reimbursement of cost whereby the three agents paid their proportionate share of the expenses incurred on these said systems and for maintaining those systems. It is re- emphasised that neither the AO nor the CIT(A) has stated that there was any profit element embedded in the payments received by the assessee from its agents in India. Record shows that the assessee had given the calculations of the total costs and pro rata division thereof among the agents for reimbursement. Not only that, the assessee have even submitted before the Transfer Pricing Officer that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before the Higher Appellate Court. However, unless and until the decision of the Tribunal is reversed or set aside by the higher Appellate Court, it is not only binding on the subordinate authorities but judicial discipline demands that it should be followed by the other Benches of the Tribunal. More so, if such decision is rendered in assessee's own case and under identical facts and circumstances. In view of the aforesaid, considering the fact that the Co-ordinate Bench has decided the disputed issue in favour of the assessee in A.Y. 2009-10 and 2011-12 as referred to above, respectfully following the same we delete the addition of Rs. 15,43,815 made by the Assessing Officer. Ground raised is allowed. 10. In ground no.2, the assessee has challenged levy of surcharge and education cess. 11. In view of our decision in ground no.1 in deleting the addition made by the Assessing Officer, this ground has become infructuous, hence, dismissed. 12. In the result, assessee's appeal is partly allowed. 6. We had carefully gone through the order of the Tribunal and found that same agreement continued during the year under consideration, therefore, respectfully following the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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