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TMI Blog2017 (1) TMI 1806X X X X Extracts X X X X X X X X Extracts X X X X ..... for introductory educational programmes/workshops - HELD THAT:- Assessee is not an educational institution or teaching in an educational institute - The consideration was in the nature of Fee for Technical Services only. Thus, the Assessing Officer was rightly made and addition which was confirmed by the CIT(A). There is no need to interfere with the order of the CIT(A) in respect of this issue. Ground No. 3 for A.Y. 2006-07 is dismissed. Applicability of Section 44B and 44BB of the Act were not at all the issues before the CIT(A) and was never part of the Assessment Order. Therefore, the judgments relied upon by the CIT(A) are not relevant at all to the present case. X X X X Extracts X X X X X X X X Extracts X X X X ..... upholding the order of the A.O in charging of interest under the provisions of Section 234A and 234B of the Act. Each of the ground is independent and without prejudice to the other grounds of appeal preferred by the Appellant." 4. The grounds of appeal are as under:- (I.T.A No. 1111/Del/2012 Assessment Year 2008-09) "1. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals)-XXIX ["CIT(A)"] erred on facts and in law in passing the impugned appellate order dated October 2, 2011. 2. That on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in upholding the action of the Assessing Officer ("A.O") in making an addition of Rs.3,982,152/- to the income of the Appellant by treating the reimbursements received from various customers as income by way of Fee for Technical Service ("FTS"). 2.1. That on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not accepting the contention of the Appellant that the reimbursements received by the Appellant do not quality as income under the Act being pure reimbursements that do not contain mark up. 3. That on the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for A.Y. 2006-07. 7. (A.Y 2008-09) For A.Y. 2008-09 the assessee filed its return of income declaring income of Rs.11,86,37,994/-. The tax was paid at the rate of 15% of gross receipts as per the provisions of Indo-UK Double Taxation voidance Agreement (hereinafter referred to as "the treaty") with regard to the agreement entered into before 1st June 2005. In respect of the agreement entered into after 1st June, 2005, the tax has been paid at the rate of 10% of gross receipts (along with surcharge and education cess) as per the provisions of the Act because the rate provided in the act was lower than the rate provided in the treaty. However, the assessee did not include an amount of Rs.39,82,152/- received by it as reimbursement of expenses incurred on travelling, boarding and lodging etc. from various customers while computing its gross receipts from fee from technical services. The CIT(A) dismissed the appeal of the assessee by holding that identical issue was involved in assessee's own case for the A.Y. 2006-07 and thus upheld the order of the Assessing Officer. The CIT(A) also observed that the scheme of taxation of royalty/FTS under the treaty or the act was simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices u/s 9(1) (vii), should be or have at least some element of income in it. Such payment should involve some compensation for the rendering of any services, which can be described as income in the hands of the recipient. In other words the component of income must be present in the total amount of fees paid for technical services to constitute as an item falling u/s ((1) (vii). Where the expenditure incurred is reimbursed as such without having any element of income in the hands of the recipient, it cannot assume the character of income deemed to accrue or arise in India. We therefore, hold that the amount of 'Management commission' in respect of FCCB issue amounting to Rs.1.62 crores and the 'Selling commission' of Rs.6.07 crores fall within the scope of income by way of fees for technical services in terms of Section 9(1) (vii). However, the other two amounts namely the 'Underwriting commission', at Rs. 2.43 crores and the 'expense reimbursed' at Rs. 1.68 crores are not income by way of fees for technical services." 10. The Ld. AR further submitted that the CIT(A) was not correct in upholding the addition made by the Assessing Officer. The interpretation of Section 9(1)(vii) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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