Case Law Details
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.
After hearing both parties and examining the record, the Tribunal noted that the issue was identical to the one decided in the assessee’s own case for Assessment Year 2013-14. Respectfully following its earlier decision, particularly the finding that reimbursement of travel and conveyance costs and salary costs of seconded employees did not warrant disallowance under Section 40(a)(ia), the Tribunal directed deletion of the impugned addition of ₹91,69,670. Accordingly, the Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
In this case, the appeal arises from order dated 25.11.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), passed by NFAC, Delhi. The Ld. AO noted that certain payments were made by the assessee for travel and conveyance reimbursement, which were considered to be in the nature of Fees for Technical Services (FTS) within the meaning of section 9(1)(vii) of the Act. The Ld. AO found that tax needed to deducted at source of such payments and since the assessee had failed to do so, hence, he invoked section 40(a)(ia) of the Act and thereafter added Rs.91,69,670/- to the total income of the assessee.
1.1 The assessee approached the CIT(A), where the Ld. CIT(A) followed the order of ITAT in assessee’s own case for AY 2013-14 and gave relief on the basis of that order (para 5.2 and 5.3 of the impugned order).
1.2 The Revenue is aggrieved with this action of Ld. CIT(A) and has approached the ITAT with grounds of appeal as under: –
“1. That the Ld. CIT(A) has erred in deleting the disallowance of Rs.91,59,670/- made by the Assessing Officer under section 40(a)(i) of the Income-tax Act, 1961, In respect of payments. made to General Electric International Inc., USA and Granite Services International Inc., USA (including its branch offices), towards reimbursement of travel and conveyance expenses.
2. That the Ld. CIT(A) has failed to appreciate that the assessee company was engaged in the business of providing technical associate services and consultancy for power plants and had made payments to foreign related parties towards travel and conveyance expenses incurred for skilled manpower rendering technical services at the assessee’s project sites in India.
3. That the Ld. CIT(A) has erred in holding that the reimbursement of travel and conveyance expenses was taxable in India, without appreciating that such expenses were incurred in connection with technical services rendered in India by Granite Services International Inc. through its manpower and were inseparably linked to the provision of technical services.
4. That the Ld. CIT(A) has erred in ignoring the contractual terms governing the arrangement between the parties, which clearly provide for rendering of technical services at site locations in India, and therefore, all costs incurred in relation to such services, including travel and conveyance, constitute consideration for fee for technical services (FTS) within the meaning of section 9(1)(vii) of the Act.
5. That the Ld.CIT(A) has failed to appreciate that the assessee did not discharge its onus of proving that the travel and conveyance expenses reimbursed to Granite Services International Inc. were independent of or unrelated to the technical services rendered to the assessee in India.
6. That the Ld. CIT(A) has erred in relying upon the order of the Hon’ble ITAT, Delhi Bench, in the assessee’s own case for A.Y. 201314, without appreciating that the principle of res judicata does not apply to income-tax proceedings and that each assessment year is a separate and independent unit of assessment.
7. That the Ld. CIT(A) has failed to consider that further appeal against the ITAT order for A.Y. 2013-14 has already been filed by the Department, and therefore, the issue has not attained finality.
8. That the Ld. CIT(A) has erred in ignoring the directions of the Hon’ble Dispute Resolution Panel in the assessee’s own case for A.Ys. 2011-12, 2012-13 and 2013-14, wherein under identical facts, payments of similar nature were held to be in the nature of fee for technical services chargeable to tax in India.”
2. Before us the Ld. DR argued on the basis of findings given by the Ld. AO and drew our attention to pages 10 & 11 of the Ld. AO’s order for the facts and pages 12 & 13 for the case laws relied on by the Ld. AO.
2.1 Per contra, the Ld. AR placed on record ITAT’s order in assessee’s own case for AY 2013-14 [M/s Fieldcore Service Solutions International India Private Limited]. It was pointed out that on identical issues the ITAT had adjudicated in favour of the assessee and that order had been followed by the Ld. CIT(A) in granting relief. The Ld. AR read out para 6.10 of the ITAT’s order: –
“6.10 Thus, it is evident that in earlier year identical expenses incurred on travel and conveyance and salary on seconded employees has not been found is liable for disallowance u/s 40(a)(ia) of the Act. This action of the Assessing Officer has not been found erroneous or fraud by the higher authorities of the Income Tax Department and, therefore, once the Assessing Officer has accepted that the payments are not liable for disallowance, we do not find any reason for agitating those very payments by the Assessing Officer in the year under consideration. Accordingly, we direct the Assessing Officer to delete the disallowance made under section 40(a)(ia) of the Act on payments reimbursed to foreign AEs towards travel and conveyance cost on salary cost of the seconded employees. The grounds No. 8 & 9 of the appeal are accordingly allowed.”
3. We have heard both the Ld. AR & DR and have gone through the records before us. We have also perused the ITAT’s order in the assessee’s own case for AY 2013-14 and respectfully following the finding given thereon, especially para 6.10 (supra), we direct the deletion of the impugned addition.
4. In the result, Revenue’s appeal is dismissed.
Order pronounced in the open court on 10.06.2026
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