DCIT Vs Fieldcore Service Solutions (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, dismissed the Revenue’s appeal and upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting the disallowance of ₹91,69,670 made under Section 40(a)(ia) of the Income Tax Act. The disallowance had been made on the ground that reimbursement of travel and conveyance expenses paid to General Electric International Inc., USA, and Granite Services International Inc., USA, constituted Fees for Technical Services (FTS) under Section 9(1)(vii), requiring deduction of tax at source. Since the assessee had not deducted tax, the Assessing Officer (AO) disallowed the expenditure under Section 40(a)(ia).
The Revenue contended that the assessee was engaged in providing technical associate services and consultancy for power plants and that the reimbursed travel and conveyance expenses were incurred in connection with skilled personnel rendering technical services in India. According to the Revenue, these expenses were inseparably linked to the provision of technical services and therefore formed part of the consideration for FTS. It also argued that each assessment year is separate and that the Tribunal’s earlier decision for Assessment Year 2013-14 had not attained finality as a further appeal had been filed.
The assessee submitted that the issue was identical to its own case for Assessment Year 2013-14, where the Tribunal had held that reimbursements towards travel and conveyance expenses and salary costs of seconded employees were not liable for disallowance under Section 40(a)(ia). The CIT(A) had followed that decision while granting relief.
