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2021 (2) TMI 718 - AT - Income TaxExpenses Incurred with no income element - Reimbursement of Global Account Management (GAM) charges - AO held that the services to the managerial/consultancy has to be considered in respect of fee for technical services/fee for included services in terms of Section 9(1)(vii) of the Income Tax Act, read with Article 12(5) of the Double Taxation Avoidance Agreement - DRP confirmed the order of the Assessing Officer thereby holding that the GAM reimbursement and consideration received on account of cost allocation of flight logistic Support Services where in the nature of FIS and make available technical knowledge, experience, skill, knowhow in terms of Article 12(4)(v) of the DTAA - HELD THAT:- The assessee during the assessment year 2011-12 has categorically mentioned that the nature of these operations is purely logistic support provided by the assessee for shipment of transport of goods perform outside in India and the contract is entered between expertise international India Pvt. Ltd. and the customers i.e. at the consigner sent in the case of expert of Consignment from India to overseas countries found USA and between the assessee and the customer that is at the consignment end in the case of import of consignment from other countries i.e. USA to India. As regards GAM charges/expenses, the cost of these group is allocated to a respective countries benefited to these services and are incurred outside India. GAM staff is employed with the assessee and there is no employer-employee relationship between the employees and the expeditor international India. These actual expenses incurred by the assessee are allocated in proportion to the Revenue by the relevant expedite group entity in that country from that particular customer account which is managed by the GAM team. These so called expenses without any income element embed in them are then reimbursement to the assessee on actual basis by Expeditors International India. These facts were neither disputed by the Revenue before the DRP in Assessment Year 2010-11 nor in the present Assessment Year i.e. A.Y. 2011-12. The activities were not changed in the present assessment year as well. Therefore, though the contention of the Ld. DR was that the agreement was not taken into account as well as the TP Study was not taken into account in Assessment Year 2010-11 does not stand correct as the agreement related to fright logistic support services and global account management charges were very much mentioned in order dated 30/09/2020 by the Tribunal - Appeal of the assessee is allowed.
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