Case Law Details

Case Name : DCIT Vs M/s AT & S India Pvt Ltd. (ITAT Kolkata)
Appeal Number : ITA No.1160 & 2305/Kol/2013
Date of Judgement/Order : 15/10/2015
Related Assessment Year :

Briefly stated facts are that the assessee has claimed the expenses of Rs.1 ,01 ,28,788/- in the form of reimbursement cost incurred by AT & S Austria towards the cost of repair / remanufacturing of defective products. The AO held that expenses as fees for technical services as defined under section 9(1 )(vii) of the Act, so he disallowed the said expenses for the violation of the provisions of section 40(a)(i) of the Act. The AO also relied on the judgment Hon’ble Delhi Tribunal in the case of Sahara Airlines Ltd. Vs DCIT( 2002) 83 ITD 11, 41(Delhi) and Hon’ble ITAT Hyderabad in the case of Mannesmann Demag Launchhammer Vs. CIT (1 988) 26 ITD 198, 202-03( Hyd.).

Aggrieved assessee preferred an appeal before CIT(A) who has upheld the order of the AO.

Now aggrieved assessee is in second appeal before ITAT. The Ld AR submitted that the decision of the Hon’ble Kolkata ITAT in Appellant’s own case (ITA No.s 1448 & 1449(Kol) of 2008 dated July 24,2009) for AY 2002- 03 and AY 2003-04, wherein it was held that reimbursement of Information technology costs does not result in income in the hands of the recipient an hence, the payments are allowable deductions and not fall within the mischief of section 40(a)(i) read with section 195. On the other hand, Ld. DR supported the order of the authorities below.

ITAT find from the aforesaid discussion and submission of the assessee that the facts have already been decided by the Hon’ble Kolkata ITAT bench in favour of the assessee in the case of DCIT v. M/s AT&S India Pvt. In ITA No. 1 262/Kol/201 0, 1 86/Kol/201 1, 2071 /Kol/201 0 & 779/Kol/201 2 for AYs 2005-06, 2006-07 & 2007-08 vide dated 29-01-2015. The relevant portion of the order is extracted below :

“18. We have considered the rival submissions and gone through facts and circumstances of the case. A perusal of the decision of the Coordinate Bench of this Tribunal referred to supra for the assessment years 2002-03 and 2003-04 clearly shows that the Tribunal has taken into consideration the agreement dated 13.03.200 1 between the assessee and AT & S Austria. Further, similarly, Hon’ble Karnataka High Court in a recent judgment in the case of DIT v. Sun Microsystems India P. Ltd. (2014) 369 ITR 63 (Karn) exactly on the similar issue interpreting article 7 of the DTAA between India and Singapore, which is identically worded to article 7 of DTAA between India and Austria held that the parent company has not made available to the assessee the technology or the technological services which was required to provide the distribution, management and logistic services. We further noticed that in the said order the Tribunal has taken into consideration the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. Dunlop Rubber Co. Limited (1983) 142 ITR 493 (Cal) and in the similar circumstances that of the assessee to hold that the reimbursement of the expenditure does not generate any income in the hands of the recipient and consequently there was no requirement of deduction of TDS and consequently the provisions of section 40(a)(ia) could not be invoked. The facts being identical for this assessment year, respectfully following the decision of Coordinate Bench of this Tribunal in the assessee’s own case for the assessment years 2002-03 and 2003-04 referred to supra, finding of CIT(A) stands reversed and the disallowance as made by the Assessing Officer in respect of the reimbursement of the payments made to AT & S Austria to the extent of Rs. 1,50,44,031/- stands deleted. This issue of assessee’s appeal is allowed.”

Since the matter is already covered in favour of assessee in its own case by this Tribunal, we conclude the appeal in favour of assessee.

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