DCIT Vs HSBC Bank PLC (ITAT Mumbai)
Revenue challenged deletion of additions made on referral fee of ₹3.77 Cr and reimbursements of ₹1.80 Cr & ₹12.73 Cr received by HSBC Bank PLC, UK, which AO had taxed as Fees for Technical Services (FTS). Tribunal noted that identical issues in assessee’s own case for earlier years were already decided in favour of assessee. Referral fee received for introducing global clients to group entities was held to be purely commercial in nature without any managerial, technical or consultancy element and hence not taxable as FTS under s.9(1)(vii) or under DTAA provisions.
Regarding reimbursement of expenses, ITAT observed that payments represented pure cost reimbursements towards social security and employee-related expenses without any mark-up and had no nexus with IT support services already offered to tax. Following earlier ITAT decisions and Bombay HC principles, reimbursements cannot be treated as income or FTS. Since facts were identical to prior assessment years, Tribunal upheld CIT(A)’s order deleting additions and dismissed Revenue’s appeal.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the Revenue is against the order of ld. CIT(A)-56, Mumbai vide order, dated 02.04.2025, passed against the assessment order by ld. DCIT (IT) 2(2)(2), Mumbai u/s. 144C(3) r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 05.02.2018, for AY 2014-15.
