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TMI Blog2020 (4) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... ducation cess and surcharge cannot be levied separately? - HELD THAT:- As relying on M/S. EPCOS ELECTRONIC COMPONENTS S.A [ 2019 (7) TMI 708 - DELHI HIGH COURT] and SUNIL V. MOTIANI [ 2013 (12) TMI 1105 - ITAT MUMBAI] direct the Assessing Officer to delete the education cess and surcharge levied on the assessee. This ground is allowed. - ITA No. 6381/Mum/2018 - - - Dated:- 19-2-2020 - Shri C.N. Prasad, Hon'ble Judicial Member And Shri G. Manjunatha, Hon'ble Accountant Member For the Assessee : Shri J. D. Mishtry And Shri Niraj Sheth For the Department : Shri V. Sreekar ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the directions of the Dispute Resolution Panel 1(WZ), Mumbai [hereinafter in short DRP ] dated 29.06.2018 passed u/s. 144C(5) of the Act. 2. Assessee in its appeal has raised following grounds: - 1:0 Re.: Treating the reimbursement of the expenses as income for the year -₹ 49,68,247/-: 1:1 The Assessing Officer/ the Dispute Resolution Panel has erred in treating the travel expenses reimbursed to the Appellant by 'GIA India Laboratory P. Ltd.' as the income of the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O as well as the DRP and the order of the Coordinate Bench for the earlier assessment years, we find that the issue and facts are identical to this year and the Coordinate Bench for the immediately preceding assessment year i.e. A.Y. 2014-15 in ITA.No. 6556/Mum/2017 dated 20.06.2018 held that the fee for technical services is different from the expenses incurred on third party cost and there is a clear bifurcation in the agreement between the internal cost incurred and external cost paid by the assessee on behalf of GIA India Laboratory Pvt. Ltd. The Tribunal applying the ratio of the decision of the Hon'ble Supreme Court in the case of DIT v. A.P. Moller Maersk [392 ITR 186] held that amount received towards reimbursement of cost cannot be taxed in the hands of the assessee. While holding so the Tribunal observed as under: - 7. We have considered rival submissions and perused materials on record. Undisputedly, the assessee has entered into a training and technical service agreement with GIA India on 1st 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by service Provider in connection with or related to the performance of the Services (collective, (i) and (ii) are referred to as Third Party Costs ). If Third Party Costs are incurred by Service Provider for the benefit of Customer and other customers, then Service Provider will allocate the Third Party Costs between and among Customer and such other customers in a manner determined by Service Provider in its sole discretion. Service Provider will invoice Customer the third Party Costs and Customer will pay such invoices within forty-five(45) days after receipt of the invoice. Such invoices may be monthly or quarterly as specified by Service Provider. 10. Thus, from the perusal of the above, it may be noted that assessee offered to tax only the amount of fee received for providing training and technical services and amount of expenses received by way of reimbursement on cost to cost basis were not shown as taxable in the hands of the assessee. The AO was of the view that whole of the amount including the amount reimbursed aggregating to ₹ 1,26,09,523 should also be included as fees in the hands of the assessee. 11. We have carefully considered the orders passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is having its IT System, which is called the Maersk Net. As the assessee is in the business of shipping, chartering and related business, it has appointed agents in various countries for booking of cargo and servicing customers in those countries, preparing documentation etc. through these agents Aforementioned three agents are appointed in India for the said purpose. All these agents of the assessee, including the three agents in India, used the Maersk Net System. This system is a facility which enables the agents to access several information like tracking of cargo of a customer, transportation schedule, customer information, documentation system and several other informations. For the sake of convenience of all these agents, a centralised system is maintained so that agents are not required to have the same system at their places to avoid unnecessary cost. The system comprises of booking and communication software, hardware and a data communications network. The system is, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t between the internal cost incurred by the assessee and external cost borne or paid by the assessee on behalf of GIA India. Thus, on the basis of aforesaid facts, the Tribunal has applied the ratio laid down by the Hon'ble Supreme Court in case of DIT v/s A.P. Moller Maersk, 392 ITR 186 (SC) and held that the amount received towards reimbursement of cost cannot be taxed at the hands of the assessee. Therefore, the observation of the learned DRP that Tribunal has not addressed the issue is baseless. 9. The learned Departmental Representative has not been able to convince us that there is any difference in facts as involved in the impugned assessment year and assessment years 2009 10 and 2011 12 on the basis of which the Tribunal has decided the issue. The correctness of the decision rendered by the Tribunal is subject to judicial scrutiny before the higher Appellate Court and the aggrieved party, which is the Department in the present case, has every right to challenge the decision of the Tribunal 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 bindin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and UAE and, therefore, tax has to be computed under the provisions of DTAA which is beneficial to the assessee. There are specific Articles in DTAA dealing with taxation of income under different heads. The business profit is governed by Article-7 whereas interest income by Article-11. Under para-7 of Article-7 where business profit includes items of income which are dealt with separately in any other Article of the agreement, provisions of those Articles should not be affected by the provisions of this Article. In other words, in case there is provision for dealing with a particular type of income, such type of income has to be dealt with by those provisions. Therefore, though interest income may have been assessed as business income, there being specific Article to deal with interest income i.e. Article-11, taxation of interest will be governed by the said Article-11. Secondly interest income may be taxed in contracting State in which it arises, according to law of that State but if the recipient is beneficial owner of interest, tax so charged shall not exceed 5% of gross interest if the interest is received from bank and in other cases 12.5% of gross amount of interest. 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