Informatica Business Solutions Pvt Ltd Vs JCIT (ITAT Bangalore)
Reimbursement of ECB Forex Loss Not Taxable u/s 28(iv); s.40(a)(iii) Issue Remanded; Reversal of Earlier-Disallowed Provision Cannot Be Taxed
Assessee, a wholly-owned subsidiary of Informatica Corp, provides Software Development, ITeS & Marketing Support services to AE. Draft assessment u/s 143(3) r.w.s 144C included TP adjustment of ₹120.28 Cr (later withdrawn from appeal via MAP), & three non-TP additions:
(1) ₹4,88,45,724 taxed u/s 28(iv) as benefit on reimbursement of ECB forex loss;
(2) ₹37,68,805 disallowed u/s 40(a)(iii) relating to seconded employees in Indonesia;
(3) ₹9,41,162 added as “provision no longer required.”
1. Reimbursement of ECB Forex Loss – Not Income u/s 28(iv)
Assessee had availed ECB from AE for capital purposes. Unrealised forex loss in earlier years was not claimed as deduction. On repayment in FY 2013-14, a realised forex loss of ₹4.885 Cr was reimbursed by AE as per agreement.
Tribunal held:
- Receipt is pure reimbursement, no benefit/perquisite element.
- s.28(iv) applies only to benefits in kind, not monetary receipts, as per Mahindra & Mahindra (SC 404 ITR 1).
- Karnataka HC in IG Petrochemicals (155 taxmann.com 45) reinforces that monetary receipts fall outside s.28(iv).
Thus, reimbursement cannot be taxed. AO directed to delete addition.



