2018 (2) TMI 1628

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..... , VP: This appeal filed by the Revenue is directed against the order passed by the CIT(A) on 10.03.2016 in relation to the assessment year 2012-13. 2. The only issue raised in this appeal is against the deletion of addition of Rs. 1,09,06,277/- made by the Assessing Officer on account of disallowance of expenses u/s 40(a)(i) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). 3 .....

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..... e to the assessee's activities which have been recouped from it on a cost to cost basis. It was, therefore, claimed that since no income element was involved in the payment, the provisions of section 195 were not attracted and, hence, no disallowance was called for u/s 40(a)(i) of the Act. Not convinced, the Assessing Officer made disallowance for the said sum, which came to be deleted in the firs .....

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..... ds of the recipient. Once a particular amount is not chargeable to tax in the hands of the non-resident recipient, the question of applicability of section 195 does not arise. Recently, the Hon'ble Supreme Court in DIT(I.T.) VS. A.P. Moller Maersk A/S (2017) 392 ITR 186 (SC) has held that once payment is in the nature of reimbursement of expenses, that is, it is a cost sharing arrangement, it cann .....

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