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2015 (11) TMI 852 - ITAT AHMEDABAD

2015 (11) TMI 852 - ITAT AHMEDABAD - [2015] 42 ITR (Trib) 477 (ITAT [Ahm]) - Computation of income under section 44D - Reimbursement of expenses not treated as part of 'fees for technical services' by CIT(A)- Held that:- Commissioner of Income-tax (Appeals) while deciding the issue in favour of the assessee has relied on the decision of the hon'ble Cuttack Bench in the assessee's own case for the assessment year 2002-03 wherein considering this clause of the agreement with NHAI and the definitio .....

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mber) Mrs. Vibha Bhalla for the appellant. Mrs. Ritika Agrawal for the respondent. ORDER The order of the Bench was delivered by 1. Anil Chaturvedi (Accountant Member).-These two appeals filed by the Revenue are against the order of the Commissioner of Income-tax (Appeals), Gandhinagar, Ahmedabad dated December 1, 2010 and November 11, 2011 for the assessment years 2007-08 and 2008-09 respectively. 2. At the outset, before us, both parties submitted that though the appeal of the assessee relates .....

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anent establishment in India and stated to be engaged in providing consulting engineering services for various infrastructure projects in India. The assessee filed its return of income for the assessment year 2007-08 on March 29, 2008 declaring total income of ₹ 7,23,59,010. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated December 29, 2009 and total income was determined at ₹ 8,99,54,322. Aggrieved by the order of the .....

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f 'fees for technical services' under section 44D." 4. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had undertaken various projects in pursuance of agreements with the Governments entered into after March 31, 1996 but before April 1, 2003. He also noticed that the assessee had received income by way of royalty or fees for technical services which were assessable under section 44D(b) of the Act. The Assessing Officer also noticed that t .....

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ng Officer was of the view that section 44D is an overriding provision and as per the provisions, no deduction in respect of any expenditure under sections 28 to 44C shall be allowed therefore the expenditure of ₹ 6,98,39,579 which was shown by the assessee under the head "consulting fee, management fee, exchange profit/loss and reimbursement of expenses" received was liable to be held as "fees for technical services" for the purpose of section 44D of the Act. He accord .....

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, the reimbursement of expenses in its case is not only as per the agreement but also is on actual basis. The hon'ble Income-tax Appellate Tribunal, Cuttack Bench has decided in favour of the assessee in the assessment year 2002-03 on this issue when it confirmed the order of the Commis sioner of Income-tax (Appeals) on similar facts where reimbursement of expenses was held to be not part of 'fees for technical services'. The facts of the case in Cochin Refineries Ltd. v. CIT [1996] .....

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chnical or other personnel. The assertions of the assessee have not been rebutted by the Assessing Officer. In the light of the above, following the decision of the hon'ble Income-tax Appellate Tribunal, Cuttack Bench in the assessee's case, I hold that reimbursement of expenses is not part of 'fees for technical services' under section 44D of the Income-tax Act. Therefore, the Assessing Officer is directed to recompute the 'fees for technical services'. This ground of ap .....

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ore the expenditure/allowance claimed by the assessee on the project was rightly disallowed by the Assessing Officer. She thus supported the order of the Assessing Officer. The learned authorised representative on the other hand reiterated the submissions made before the Assessing Officer and the learned Commissioner of Income-tax (Appeals) and further submitted that the facts in the present case are identical to the facts of the case for the assessment year 2002-03 and the issue in the present .....

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unt of reimbursement is not to be considered as part of the income whereas the Revenue's contention is that while computing the income under section 44D, no deduction of expenditure is to be allowed. We find that the learned Commissioner of Income-tax (Appeals) while deciding the issue in favour of the assessee has relied on the decision of the hon'ble Cuttack Bench in the assessee's own case for the assessment year 2002-03. We find that the learned Commissioner of Income-tax (Appeal .....

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logical and correct. It is specifically mentioned in the contract, as to which expenses would be reimbursed and at what rate. Considering this clause of the agreement with NHAI and the definition of 'fees for technical services', under the Income-tax Act, as well as, the definition of 'fees for technical services', under the Double Taxation Avoidance Agreement, the receipts in the nature of reimbursement of expenses, cannot be treated as, fees for technical services. Hence, I he .....

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n I. T. A. No. 140/Ctk/2006 (the copy of which is placed at pages 17 to 24 of the paper book). During the course of hearing, the Bench inquired from both the parties as to whether the aforesaid order of Cuttack Bench in the assessee's own case for the assessment year 2002-03 has attained finality or has been reversed by the higher authorities to which the learned authorised representative submitted that on the case being transferred from the Deputy Commissioner of Income-tax, Bhubaneswar to .....

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