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TMI Blog2015 (4) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... es" as per Article 12(4) of India-USA T- France Tax Treaty 2.1The CIT(A) erred in not admitting the additional ground of appeal reproduced in the Order of CIT(A) under para 14, same having been taken on account of the view on the appellant's ground of appeal being taken by CIT(A), gathered in the course of appeal proceedings. proceedings. 2.2 It is submitted that disallowance of Rs. 50,59,019 on the ground completely other than basis of the assessing officer was not called for and in any case on that basis, additional ground as raised should have been admitted. 3.1 Assessing Officer erred in disallowing expenditure on foreign travel of Rs. 6,87,066 being expenditure on foreign travel of business associates and CIT(A) erred in confirming the same. The appellant submits that the said expenditure is incurred for commercial expediency. Hence. same be allowed. 3.2 1he appellant notes that for similar disallowance of foreign travel expenditure for A.Y 93-94 appeal is pending before the Supreme Court and for A.Ys. 1995-96 to 1998- 99 appeals are pending before Bombay High Court." Grounds of Appeal in ITA No.659/Mum/2007(A.Y.2003-04): 1.1 The assessing officer erred and CIT(A) in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forementioned order passed by the Tribunal Revenue had preferred an appeal which has also been decided by their Lordship of Hon'ble Bombay High Court vide their order dated 28/09/2011 in ITA No.3377 of 2010, copy of the said order is also placed on record. One common issue raised in all the appeals is regarding disallowance made by the AO in respect of amount paid by the assessee to its Head Office, which according to assessee is in the nature of reimbursement of technical expenses and is not taxable in India. As against the said claim of the assessee it is the claim of the Revenue that the said amount is taxable in the hands of the Head Office and since no tax has been deducted by the assessee which was required to be deducted, the disallowance was called for under section 40(a)(ia) of the Income Tax Act, 1961(the Act). It is also the case of the Revenue that the said amount is also assessable in the hands of the assessee as the said amount is received by the Head Office of the assessee is in the nature of "fee for technical services" which is taxable in India @ 20% apart from other income of the permanent establish as per Double Taxation Avoidance Agreement (DTAA) between India a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that since the said amount has already been added to the income of the P.E the same amount cannot be added again in the hands of PE separately from its income assessable as PE. Ld. CIT(A) held that such amount would amount to double taxation. For the sake of completeness such conclusion of Ld. CIT(A) are reproduced below. "9. The appellant is accepting that technical services are being provided to the branch by Bureau Veritas, Paris (refer para 2 of Annexure to Note 1 with the statement of facts in which the details of technical services actually provided by our Head office' is given. Therefore, the amount of Rs. 50,59,019/- is 'fees for technical services" taxable under Article 13 of the India France Tax Treaty. The appellant's contention based on para 26 of ABN Amro Bank NV supra that the amount cannot be considered disallowable in the hands of the branch while computing its business income is not accepted. Therefore, the disallowance of the claim of share of technical expenses of Rs. 50,59,619/- made by the AO is confirmed on the ground that the payment of expenditure is to self and reliance in this regard is placed upon ABN Amro Bank NV supra. Alternatively, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforementioned findings of the Ld. CIT(A) the Revenue in its appeal for A.Y 2002-03 had raised following ground which is decided by aforementioned order dated 29/10/09 rendered in Revenue's cross appeal. "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer (not) to tax the 'fees for technical services' received by the head office amounting to Rs. 50,59,019/- separately from the other income of the PE (permanent establishment) as payment to self." 5. The appeal filed by the Revenue has been dismissed by the Tribunal. The Tribunal has recorded a finding of fact that the payment made by the assessee to its Head Office was in the nature of reimbursement of technical expenses and accordingly amount being not taxable in India, the assessee is justified in not deducting tax at source. Consequently no disallowance could be made on the said amount of fee for technical services paid by the assessee to its Head Office. These findings of Tribunal are mentioned in the order passed by Hon'ble High Court dated 28/09/2011(supra) and the said order is reproduced below. "1. Whether the Income Tax Appellate Tribunal was just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ience, etc. or consisted of development and transfer of technical plan or design. Generally speaking, technical services are treated as having been 'made available' when recipient of such technical services is enabled to perform such services without recourse to the service provider. In the instant case, the payment for technical services, which was sought to be brought to tax in the hands of the assessee was in the nature of reimbursement of technical expenses to the head office. The Assessing Officer had observed that 'the head office expenditure allocated to the Indian division was in the nature of technical and administrative expenses'. Thus, this amount was not on account of any specific technical services having been 'made available', in the sense in which this expression was employed in the tax treaties, the amount could not be brought to tax in the hands of the assessee under article 13 of the Indo- French tax treaty. This amount could not also be taxed in the hands of the assessee under article 7 as it was not an income 'attributable to PE'. Hence, the taxability of the impugned sum in the assessee's hand was indeed incorrect. 5.3 The above observation of Tribunal can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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