TMI Blog2018 (11) TMI 1777X X X X Extracts X X X X X X X X Extracts X X X X ..... l has erred in reopening the Appellant's assessment u/s. 148 of the Income-tax Act, 1961. 1:2 The Appellant submits that considering the facts and circumstances of the case and the law prevailing on the subject the re-opening u/s. 148 of the Income-tax Act, 1961 was in excess of jurisdiction and is also otherwise bad in law. 1:3 The Appellant submits that the proceedings u/s. 148 of the Act were not in accordance with law and consequently ought to be struck down. Without prejudice to the foregoing; 2: 0 Re .: Treating the reimbursement of the travel expenses as income for the year- ₹ 65.44.883/- 2 : 1 The Assessing Officer / the Dispute Resolution Panel has erred in confirming the treatment of travel amounts reimbursed to the Appellant by GIA India Laboratory P. Ltd., as the income of the Appellant for the year. 2:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the travel expenses reimbursed to it cannot be treated as its income and the stand taken by the Assessing Officer / the Dispute Resolution Panel in this regard is illegal, incorrect, erroneous and misconceived. 2:3 The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, taxable. Accordingly, he framed the draft assessment order bringing to tax the amount of ₹ 15,43,815. Against such addition proposed in the draft assessment order, the assessee raised objections before the DRP. 4. In course of hearing before the DRP, the assessee while justifying its claim also brought to the notice of DRP that identical dispute arising in assessment year 2009-10 and 2011-12 was decided in favour of the assessee by the Tribunal. The DRP, though, took note of the order passed by the Tribunal in assessee's own case for assessment year 2009-10 and 2011-12, however, it observed that the Tribunal has not addressed the issue as to whether the gross amount relatable to services rendered by the assessee can be bifurcated for purpose of computing tax on gross basis. The DRP observed, while arriving at its decision, in respect of non-taxability of reimbursement of cost the Tribunal has not 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 gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and Indian company and when the receipts under the said agreement is to be taxed on gross basis, there is no scope for bifurcating the amount received towards fee for technical service and reimbursement of cost. Therefore, he submitted, the Tribunal having not appreciated the facts correctly the decision rendered in the preceding assessment years need not be followed. 7. We have considered rival submissions and perused materials on record. Undisputedly, the assessee has entered into a training and technical service agreement with GIA India on 1 st November 2008, for training the employees of GIA India and providing technical services for the implementation of grading policies, procedures and processes. It is also not disputed that in pursuance of such agreement, the assessee has raised separate debit notes for fee for training and technical services and towards reimbursement of certain costs like travel expenses, 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer the third Party Costs and Customer will pay such invoices within fortyfive(45) days after receipt of the invoice. Such invoices may be monthly or quarterly as specified by Service Provider. 10. Thus, from the perusal of the above, it may be noted that assessee offered to tax only the amount of fee received for providing training and technical services and amount of expenses received by way of reimbursement on cost to cost basis were not shown as taxable in the hands of the assessee. The AO was of the view that whole of the amount including the amount reimbursed aggregating to ₹ 1,26,09,523 should also be included as fees in the hands of the assessee. 11. We have carefully considered the orders passed by the lower authorities and we do not agree with the stand adopted by the lower authorities. It may be noted from the perusal of the terms of the agreement which are reproduced above that assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s system is a facility which enables the agents to access several information like tracking of cargo of a customer, transportation schedule, customer information, documentation system and several other informations. For the sake of convenience of all these agents, a centralised system is maintained so that agents are not required to have the same system at their places to avoid unnecessary cost. The system comprises of booking and communication software, hardware and a data communications network. The system is, thus, integral part of the international shipping business of the assessee and runs on a combination of mainframe and non-mainframe servers located in Denmark. Expenditure which is incurred for running this business is shared by all the agents. In this manner, the systems enable the agents to coordinate cargos and ports of call for its fleet. 11. Aforesaid are the findings of facts. It is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aseless. 9. The learned Departmental Representative has not been able to convince us that 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. The correctness of the decision rendered by the Tribunal is subject to judicial scrutiny before the higher Appellate Court and the aggrieved party, which is the Department in the present case, has every right to challenge the decision of the Tribunal before the Higher Appellate Court. However, 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. In view of the aforesaid, considering the fact that the Co-ordinate Bench has decided the disputed issue in favour of the assessee in A.Y. 2009-10 and 2011-12 as referred to above, respectfully following the same we delete the addition of ₹ 15,43,815 made by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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