TMI Blog2018 (6) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... there is any difference in facts as involved in the impugned assessment year and assessment years 2009–10 and 2011–12 on the basis of which the Tribunal has decided the issue - unless and until the decision of the Tribunal is reversed or set aside by the higher Appellate Court, it is not only binding on the subordinate authorities but judicial discipline demands that it should be followed by the other Benches of the Tribunal. More so, if such decision is rendered in assessee’s own case and under identical facts and circumstances - Decided in favour of assessee - ITA no.6556/Mum./2017 - - - Dated:- 20-6-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N. K. PRADHAN, ACCOUNTANT MEMBER For The Assessee : Shri J.D. Mistry a/w Shri Niraj Sheth For The Revenue : Shri Samuel Darse ORDER PER SAKTIJIT DEY, J.M. Aforesaid appeal at the instance of the assessee is directed against assessment order dated 28th September 2017, passed under section 143(3) r/w 144C(3) of the Income Tax Act, 1961 (for short the Act ) in pursuance to the directions of the Dispute Resolution Panel I (DRP), Mumbai, pertaining to the assessment year 2014 15. 2. In ground no.1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dealt with the issue as to whether the amount is clearly in the nature of reimbursement or not. Referring to certain judicial precedents, DRP observed that when the assessee itself admits that the amount of fee for technical services are liable to tax in India on a gross basis as per Article 12 of the India USA Double Taxation Avoidance Agreement (DTAA), if during the course of rendering such services certain costs have been incurred which have been reimbursed, it has to be included in the receipts of the assessee as taxability of such receipts has to be considered on a gross basis. According to the DRP, it is not material whether a portion of the cost does not have an income element. Thus, ultimately, the DRP upheld the addition made by the Assessing Officer in the draft assessment order and directed the Assessing Officer to finalize the same. 5. The learned Sr. Counsel, Shri J.D. Mistry, appearing for the assessee submitted that the agreement in pursuance to which services were rendered by the assessee was executed on 1st November 2008, and was continuing for the subsequent years including the impugned assessment year. He submitted, in terms of the agreement the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , meals, etc. While it is the claim of the assessee that the reimbursement of cost of travel and meals by GIA India is on actual basis without any profit element, hence, not to be included in the income, it is the stand of the Department that there is no scope for bifurcation of the amount received by the assessee under the agreement, as it has to be taxed on gross basis as fee for technical services. There is no dispute that the agreement under which the assessee has received the disputed amount is continuing from assessment year 2009 10. While deciding identical dispute in assessee s own case for assessment year 2009 10 and 2011 12, in ITA no.4659/Mum./2014 and ITA no.385/Mum./2016, dated 9th May 2017, the Tribunal has held as under: 8. We have gone through the orders passed by the lower authorities and arguments made before us by both the sides. 9. The brief facts are that the assessee company incorporated in USA is engaged in grading and certification of diamonds. GIA India, (i.e. the company incorporated in India) entered into an agreement with the assessee company for availing training and technical services. The terms regarding payment of fee and reimbursement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was entitled to receive by way of fee only the amount incurred by way of cost to employ‟ the individuals plus mark-up of 6.5%. Clearly speaking, the expression cost to employ‟ individuals is different from the expression cost incurred to depute‟ a person. The cost of employment would clearly mean and include only internal costs as are incurred by an organisation to employ an individual in the organisation. Any cost incurred over and above that to depute the individual for a particular assignment which is not internal assignment of the assessee would be additional cost. Thus, in the case before us, costs and expenses incurred by the assessee on travel and insurance etc on the persons deputed in India for providing training and technical services to GIA India was in the nature of cost incurred over and above the cost of employment. This interpretation is further re-enforced when we read the next clause, i.e. clause 1.3 which says that GIA India shall reimburse to the assessee any expenses incurred on account of thirty party costs. The drafting of the agreement and manner of placements the clauses in the agreement clearly make out a case that FTS is different f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly held that no technical services are provided by the assessee to the agents. Once these are accepted, by no stretch of imagination, payments made by the agents can be treated as fee for technical service. It is in the nature of reimbursement of cost whereby the three agents paid their proportionate share of the expenses incurred on these said systems and for maintaining those systems. It is re-emphasised that neither the AO nor the CIT(A) has stated that there was any profit element embedded in the payments received by the assessee from its agents in India. Record shows that the assessee had given the calculations of the total costs and pro rata division thereof among the agents for reimbursement. Not only that, the assessee have even submitted before the Transfer Pricing Officer that these payments were reimbursement in the hands of the assessee and the reimbursement was accepted as such at arm‟s length. Once the character of the payment is found to be in the nature of reimbursement of the expenses, it cannot be income chargeable to tax........ (Emphasis supplied in bold) Thus, from the above judgement it is clear that the amount received by the assessee on acco ..... 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