DCIT Vs Jefferies International Ltd. (ITAT Mumbai)
ITAT Mumbai held that that reimbursement of expenses at cost is not taxable as fees for technical services since there is no element of income attached to the transaction. Accordingly, revenue’s appeal dismissed.
Facts- The assessee is a non-resident corporate entity, incorporated in United Kingdom and is a tax resident of UK. The assessee has a subsidiary in India, being Jefferies India Private Ltd. (JIPL), which is registered with Securities and Exchange Board of India (SEBI), as a Category 1 Merchant Banker and a stock broker. The principal activities of JIPL is to provide merchant banking and investment advisory services to investors, corporate and stock broking services to domestic and foreign Institutional Investors. Assessee had provided administrative support services to the Indian subsidiary during the year under consideration and received revenue on that account. Assessee claimed that the consideration received towards provision of administrative support services, is not taxable in India. However, the A.O. was of the view that such services, being in the nature of technical service fee, has to be treated as ‘FTS’, hence, has to be brought to tax in India.
Further, AO also proceeded to treat reimbursement of expense as FTS and brought it to tax under Article 13(4) of India-UK treaty.
