TMI Blog2008 (1) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... was entered into for rendering technical services. The services of the experts of the foreign company were requisitioned in that connection. There is absolutely nothing on record to indicate that how such reimbursement could be termed as business income of the assessee. The payments of reimbursement were made in the process of executing the agreement. The expenditure in question was part and parcel in the process of advice of technical character. As such the payment on account of reimbursement also attracts the provisions of s. 195 of the Act. We have gone through the reasonings adduced in the impugned order. In our opinion the CIT(A) took a correct view in the matter and his order calls for no interference on this count. Accordingly we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct tax at 10 per cent on such reimbursements. The matter was assailed in appeal before the CIT(A). The CIT(A) confirmed the order of the AO. Being aggrieved of the said order the assessee is in appeal. The Revenue authorities took the view that the amount sought to be reimbursed in terms of the agreement would constitute fees for technical services. As such the assessee is duty-bound to deduct tax at source in accordance with the prescription of s. 195(2) of the Act. 4. Shri R. Vijayaraghavan, the learned counsel for the assessee invited our attention on the prescription of s. 195 and submitted that it is applicable only in the context of such sums which are chargeable to tax under the Act. At the outset it was contended that reimbursem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Republic of India and the Government of the Republic of Austria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income dt. 20th Sept., 2001 [(2001) 170 CTR (St) 32 : (2001) 251 ITR (St) 97] even if it is treated as income, it could be taxed only in Austria. Reference was made to art. 7 of the DTAA, which deals with business profits. Lastly, it was argued that this was only reimbursement of expenses of individuals. Each one of them was in India for less than sixty days. As such it is not exigible to tax. Reliance was placed on the decision of the Hon'ble Delhi High Court rendered in the case of CIT vs. Bharat Heavy Electricals (2001) 171 CTR (Del) 328 : (2001) 252 ITR 218 (Del). In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbursed the expenses incurred by the foreign company. The Hon'ble High Court has held that the services rendered by the foreign company would be in the nature of technical services and would therefore consequently be covered fully by the Explanation to s. 9(1)(vii) of the Act. Even with regard to the payments of reimbursement, no different situation would be available because these payments would be part and parcel in the process of advice of a technical character and would fall for coverage only within the meaning of the above Explanation to s. 9(1)(vii). Reliance was also placed on the decision of the Hon'ble Madras High Court rendered in the case of CIT vs. Cross Fraser Division by Agent BHEL (2001) 167 CTR (Mad) 400 : (2000) 244 ITR 65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of s. 195 that it is applicable in the context of such sums which are chargeable to tax under the Act. It is therefore, necessary to enquire as to whether the amount in question could be charged to tax. 8. The assessee did not have any PE in India. There is absolutely no dispute on this point. But this fact is relevant if the income in question bears the character of business income. It is not relevant in the context of chargeability of tax on fees for technical services. The agreement was entered into for rendering technical services. The services of the experts of the foreign company were requisitioned in that connection. There is absolutely nothing on record to indicate that how such reimbursement could be termed as business in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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