Case Law Details
Rieter Machine Works Limited Vs ACIT (ITAT Pune)
Facts- The assessee rendered IT services of INR 20.04 Crores to group company and tax of 10% was paid pursuant to Master Services Agreement with RIPL. The assessee claimed an amount of INR 3,88,94,824 as reimbursement of IT licence cost incurred towards centrally purchasing software licenses on which no tax was paid.
Conclusion- To categorize a particular amount as reimbursement, it is sine-qua-non that the expenditure should be incurred for and on behalf of the other. It envisages two cumulative conditions, viz., first that undiluted benefit flowing from the incurring of the expenditure is passed on, as such, to the other and the second, that the amount incurred is recovered as it is from the other without any plus or minus to that.
If one of the condition is not satisfied, the test of reimbursement fails. In the present case, neither the undiluted benefit of the software cost was passed on to RIPL nor did the assessee recover the amount as it is from RIPL.
FULL TEXT OF THE ORDER OF ITAT PUNE
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