Kolkata ITAT rules that
payment received by assessee (a US company engaged in manufacturing and sale of
bearings) from its Indian subsidiary (‘TIL’) towards reimbursement of expenses
for the services provided by third parties, not taxable during AYs 2002-03 to
2007-08, as assessee was not the ultimate beneficiary of the sum in question
nor did it render any service to TIL; ITAT notes that expenses claimed as
reimbursement included legal expenses, training, inspection & survey
expenses, airfare, local conveyance, etc., further notes that the actuals
billed by the third parties were paid by the assessee in USA and were later on
reimbursed by TIL to assessee; ITAT remarks that “there is no basis for the AO
to conclude that the payment of reimbursements were in the nature of FTS”,
furthermore ITAT notes that the assessee made no profit on such reimbursements;
Separately, ITAT holds that payment received by assessee for rendering intra
group services to TIL was not taxable, notes that pursuant to agreement with TIL,
assessee agreed to render various services (like management services,
information resources, communication services, engineering services,
Metallurgical services, tool design services, planning and inventory management
services, quality assurance services, etc.) on cost basis to TIL, which were
purely advisory in nature; Further observes that nothing was made available to
TIL, cites MOU to India USA DTAA to hold that consideration for advisory
services cannot be treated as fees for included services (‘FIS’) under Article
12(4)(b), moreover, absent PE in India, ITAT holds that income cannot be taxed
under Article 7 as ‘business profits’ either:ITAT
No comments:
Post a Comment