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TMI Blog2016 (6) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... expatriates (employees deputed by the assessee) do not constitute income in the hands of the assessee. 3. Facts relating to the above said issue are stated in brief. The assessee, a foreign company, is engaged in the business of providing personnel having experience in construction projects. The assessee's group concerns named Hazira Marine Engineering & Construction Management Pvt. Ltd. (HME) and Hazira Cryogenic & Construction Management Private Limited (HCE) are Indian companies operating in India. The assessee has sent its employees to the group companies stated above for carrying out certain works. As per the agreement entered into between the assessee and the companies cited above, Indian group Companies are required to reimburse tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany to the applicant company in providing these, vices was in the nature of Quid Pro Quo for the services and not reimbursement of expenses and, therefore, the payment of fees had to be made by the Indian company only after withholding tax u/s 195. 4.6 It has also been held in the case of Steffen, Robertson and Kirsten Consulting Engineers & Scientists (230 ITR 206) by the Authority for Advance Rulings that there was no difference between the fees for engineering services and the fees relatable to living allowances or traveling charges of the employees who would rendered the services. 4.7 It has been held in the case of Cochin Refineries Ltd. ( 222 ITR 354) by the Kerala High Court that the services rendered by the foreign company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not show any break up of expenses. A supplementary appendix then seeks to explain the bifurcation of the various expenses. From this it is apparent that in the case of the travel expenses there is a single invoice which is raised which supports the conclusion that these expenses are nothing but a part of the fees for technical services rendered by the assessee. Subsequently, it has been sought to segregate the travel expenses from gross amount and claim that the same is not chargeable to tax. Furthermore, there in the absence of the global accounts of the assessee it is not possible to verify whether the alleged reimbursements are in fact expenses which have been actually paid by the assessee and are not income. 10. In view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a case where living allowance is a component of the fee paid to the assessee. The issue regarding taxability of living allowance paid by the Indian companies will arise in the hands of the expatriates and not in the hands of the assessee. It was the obligation of the Indian company to pay living allowance in term of the above said agreement between the appellant and the Indian company. Accordingly, the reimbursement of expenses to the assessee by the Indian companies is not in the nature of income and the same is not liable to tax. Further, the Dispute Resolution Panel for assessment year 2006-07 and 2007-08, in appellant's own case has held that as the payments made directly to the expatriates cannot be disallowed relying on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the decisions rendered by Hon'ble Bombay High Court in the cases of Krupp Udhe GMBH (ITA No. 2626 of 2009) and Seimens Aktiogesellschaft (310 ITR 320) are not applicable to the facts prevailing in the instant case, since the transactions have been entered between the related parties. He submitted that the deputed employees, i.e., the expatriates remained as employees of the assessee company even after their deputation to India. He submitted that the Hon'ble Delhi High Court has held in the case of Centrica India Offshore (364 ITR 336) has held that the salary paid to expatriates shall be taken as part of fee for services. Accordingly he submitted that the splitting up of the fees into several components like Fees, living allowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian companies are not related parties. The Ld D.R has pointed out that they are related parties, which fact was not disputed by the assessee. 8. We have noticed that the addition made by the assessing officer has been deleted by DRP in AY 2006-07 and 2007-08. Identical additions made in AY 2003-04 and 2004-05 have also been deleted by the Tribunal, even though there was misunderstanding about the facts. But the fact remains that the order of the Tribunal passed for AY 2003-04 and 2004-05 remains in operation as of now. We are dealing with AY 2005-06, which falls in between the above said years. Even though there is merit in the contentions of the Ld D.R yet, in order to maintain consistency in the matter, we are inclined to uphold the view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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