Amounts received towards reimbursement of expenses can, under no circumstances, be regarded as a revenue Receipt and is not chargeable to income-tax (Reliance was placed on the decisions of the Kolkata HC in the case of Dunlop Rubber Co. Ltd and that of the Delhi HC in the case of Industrial Engineering Projects)

CIT v. Siemens AG (310 ITR 320)

In case of Danfoss Industries the AAR held that was held that payments to a foreign company under a cost sharing arrangement was tax deductible as the same was a consideration for rendering of service and not a reimbursement.

The AAR also held that an element of profit is not essential ingredients of receipt to be taxable as income and even assuming that fees charged by an overseas entity from the resident entity is equivalent to the expenses incurred by the resident entity in providing the services, it would then be a case of quid pro quo for the service fees and not a case of reimbursement of expenses.

Danfoss Industries Pvt.Ltd (268 ITR 1) and Timken India Limited (273 ITR 67)


Where payments to foreign technicians were made outside India for services rendered outside India and no tax was deducted there from – the said payments cannot be disallowed under section 40(a)(i)

International Creative Foods (9 191) (Ker)


There is no such requirement in section 199 that credit of TDS is to be allowed only after confirmation is received from the issuer of the TDS certificates

Ramakant Singh v. CIT (No.2) (8 ITR 505) (Patna ITAT)

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February 2024