The Tax Publishers2019 TaxPub(DT) 7081 (Mum-Trib)

INCOME TAX ACT, 1961

Section 90

Reimbursement received by assessee was in respect of specific and actual expenses incurred by assessee and did not involve any mark-up and assessee having furnished sufficient evidence to demonstrate incurring of said expenses, accordingly, there was no good reason to make any addition to income in respect of the reimbursement of expenses.

Double taxation relief - Agreement between India and UK - Fee for technical services - Reimbursement received by assessee was in respect of specific and actual expenses incurred by assessee

Assessee-company based at in the UK was engaged in providing banking and financial services to individuals and commercial organizations across the world. It received certain payment from HSBC Electronic Data Processing India (P) Ltd (HDPI). AO taxed the same in assessee's hands as fee for technical services. Assessee submitted that payment received by it from HDPI was mere cost reimbursement towards payments made by assessee and same did not represent assessee's income and had no nexus with IT enabled services being provided by assessee to HDPI. Held: Assessee filed sample copies of invoices raised by assessee on HDPI's UK Branch which pertained to cost reimbursements (i.e. reimbursement of payroll, rent, other miscellaneous expenses) and invoices raised by assessee on HDPI for social security related payments of seconded employee. Such reimbursement of expenses had no nexus with IT related services rendered by assessee to HDPI, which had been taxed in the hands of assessee. Reimbursement received by assessee was in respect of specific and actual expenses incurred by assessee and did not involve any mark-up and assessee having furnished sufficient evidence to demonstrate incurring of said expenses, there was thus, no good reason to make any addition to income in respect of the reimbursement of expenses.

REFERRED : DIT (IT) v. A.P. Moller Maersk AS (2017) 392 ITR 186 (SC) : 2017 TaxPub(DT) 0638 (SC) and CIT v. Siemens Aktiongesellschaft (2009) 310 ITR 320 (Bom.) : 2009 TaxPub(DT) 1060 (Bom-HC).

FAVOUR : In assessee's favour.

A.Y. : 2011-12


INCOME TAX ACT, 1961

Section 90

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