TMI Blog2015 (12) TMI 1799X X X X Extracts X X X X X X X X Extracts X X X X ..... , in view of independence fiction of art. 7(2). Reimbursement of the expenses as part of the income of the assessee - HELD THAT:- As decided in assessee's own case [ 2015 (9) TMI 1532 - ITAT MUMBAI] the reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any markup, there is reasonable control mechanism in place to ensure that these claims are not inflated, and the assessee has furnished sufficient evidence to demonstrate the incurring of expenses. There is thus no good reason to make any addition to income in respect of these reimbursements of expenses. The action of the CIT(A), as learned counsel rightly contends, on pure surmises and conjectures. Income accrued in India - income relatable to work performed in India in liable for taxation in India - profit as attributable to the PE, can only be assessed in India - HELD THAT:- This issue also stands covered in favour of the assessee on the basis of orders of the Tribunal passed in the case of the assessee for A.Y. 1997-98 wherein it was held that only income related to services rendered in India, is liable to tax in India. Further, reliance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) erred in confirming the disallowance in respect of disbursement to the extent of 15% of the disbursement claim proportionate to the fee relating to services rendered in India as compared to the total fees. The Commissioner (Appeals) ought to have entirely deleted the disallowance. 5. The learned Commissioner (Appeals) erred in not specifically directing the Assessing Officer to allow deduction for bad debts of 2,55,255.14 6. The learned Commissioner (Appeals) erred in not directing the Assessing Officer to allow deduction for bad debts in respect of services rendered outside India if, income in respect of services rendered outside India was ultimately held as taxable in India. 7. The learned Commissioner (Appeals) erred in directing the Assessing Officer to apply the rate of tax applicable for a firm. The learned Commissioner (Appeals) ought to have appreciated that the correct rate of tax applicable is that of association of persons i.e. 30%. 8. The learned Commissioner (Appeals) erred in not entirely deleting the interest levied under section 234B. 9. The learned Commissioner (Appeals) erred in not quashing the penalty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged the issue of Permanent Establishment in India under Article 5(2)(k) of India UK DTAA. 6. As stated above, the assessee is providing legal services in various areas and during the relevant previous year, the assessee had rendered Legal Consultancy Services in connection with the different projects to various concerns both within and outside India. The details of the different projects for which some part of the work were performed in India, for which invoices were raised have been incorporated at pages 2 3 of the impugned assessment order. Assessee s case before the Revenue authorities had been that, it had not opened any branch or office in India and neither it has any office or place of work in India for rendering the services. All the legal services are provided by the Partners and staff in UK and the expenses of travel, stay at hotels and other locations and other incidental expenses were borne by the clients. Thus, there is no Permanent Establishment of the assessee in India within the ambit of Article 5 of the DTAA between India and UK. Not even within the meaning of Article 5(2)(k) does the assessee has any service PE, because the partners and staff of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7(2). 9. Thus, respectfully following the earlier years orders and the judicial precedence, which is applicable on the facts permeating in this year, also we decide the impugned issue against the assessee. Accordingly, ground no. 2 stands dismissed. 3.4. We find that the facts are same in this year as well. No distinction has been made by the assessee. The issue involved before us is identical to the issue that was involved in the aforesaid order, and therefore, respectfully following the same this ground is decided against the assessee. Accordingly, ground no.1 is dismissed. 4. Ground No. 2: It has been submitted by the Ld. Senior Counsel of the assessee that the Assessing Officer in the order giving effect to the order passed by Ld. CIT(A) has allowed appropriate relief to the assessee and therefore, this ground has become academic and is not required to be adjudicated, therefore, it is dismissed as infructuous. 5. Ground Nos. 3 4: In these grounds, the assessee has challenged the action of Ld. CIT(A) in holding the action of the AO in treating reimbursement of the expenses as part of the income of the assessee. During the course of he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, ground no. 7, 8 9 are treated as infructuous, being purely academic in view of the issues decided in the foregoing grounds. 5.3. We have gone through the facts of the case and find that the facts are similar and issued decided by the Tribunal is identical and therefore, we allow these grounds in favour of the assessee and against the Revenue and direct the AO to follow the aforesaid order of the Tribunal. 6. Ground Nos. 5 6: With regard to these grounds it has been submitted by the Ld. Counsel these have become infructuous as the assessee has rightly given effect to the order passed by the Ld. CIT(A), and therefore, no grievance of the assessee was left. 6.1. In view of the aforesaid submissions these grounds are dismissed as infructuous. 7. Ground No.7: This ground has not been pressed by the Ld. Senior counsel of the assessee, and therefore, the same is dismissed. 8. Ground No. 8: In this ground, the assessee has challenged the action of Ld. CIT(A) in not entirely deleting the interest levied u/s.234B. 8.1. During the course of hearing, Ld. Senior counsel has submitted that this issue has been decided in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to allow 85% of disbursement claim proportionate to the fee relating to the services rendered in India as compared to total fees. 3. The appellant prays that the order of the Ld.CIT(A) on the above grounds be set aside and that of the AO restored. 4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 12. Ground No.1: In this ground, the Revenue is aggrieved with the action of Ld. CIT(A) in holding that only the income relatable to work performed in India in liable for taxation in India. In this regard Ld. Senior counsel of the assessee has submitted that this issue also stands covered in favour of the assessee on the basis of orders of the Tribunal passed in the case of the assessee for A.Y. 1997-98 M.A.No.392/M/2004 order dated 20.02.2015 and order dated 7.9.2014 (for A.Y. 1998-99 and 2001-02), wherein it was held that only income related to services rendered in India, is liable to tax in India. Further, reliance was also placed by him upon the judgment of Hon ble Mumbai Special Bench of the Tribunal in the case of Clifford Chance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted by the Ld. Senior counsel that this issue also stands covered in favour of the assessee by the orders of the Tribunal in assessee s own case, particulars of which have already been given in ground no.1 of assessee s appeal. For the sake of ready reference, we refer to the order of the Tribunal dated 7.9.2015 and reproduced relevant para hereunder: 21. As regards issue raised in ground no. 3, that is, restricting the disallowance of reimbursement to the extent of 25% as against 100%, it has been pointed by Ld. Senior Counsel that the Tribunal has already held that no amount is disallowable and this ground is similar to ground no. 5 6 of the assessee s appeal. Accordingly, in view of the finding given therein that none of the reimbursement of expenses amount can be considered as income of the assessee this issue is decided in favour of the assessee and against Revenue. Accordingly, ground no. 3 as raised by the Revenue is dismissed. 14.1. We direct the AO to follow the aforesaid order of the Tribunal, and hold that no amount should be disallowed. Thus, ground no.2 of the Revenue s appeal stands dismissed. 15. As a result appeal of the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2003-04 17. As a result appeal of the assessee is partly allowed. ITA No.4908/Mum/2010 Revenue s appeal for A.Y. 2007- 0-8 In this appeal Revenue has filed following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that only the income relatable to the work performed in India is liable for taxation in India. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in directing the Assessing Of f icer to al low 85% of disbursement claim proportionate to the fee relating to the services rendered in India as compared to total fees. 3. On the fac ts and in the c i r cumstances of the case and in law, the ld. CIT(Appeals) erred in deleting interest charged uls.234B of the Act holding that tax is deductible at source in this case ignoring the fact that assessee had not applied for order for nil deduction of tax or lower deduction of tax at source. 4. The appellant prays that the order of the Ld. CIT(A), Mumbai on the above ground be set aside and the order of the Assessing Officer be restored. 18. Both the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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