Tribunal rules HDFC Chubb payment not income under tax treaty, interest deletion upheld.

The Tribunal upheld the deletion of the addition made from the amount received from HDFC Chubb, considering it as a reimbursement and not income, based on the Double Taxation Avoidance Agreement between India and Singapore. The Tribunal also confirmed the deletion of interest under section 234B, following the precedent set by the Special Bench in the case of Motorola Inc. vs. DCIT, resulting in the dismissal of the Revenue's appeal.

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Issues involved: Appeal against deletion of addition made from amount received from HDFC Chubb and restoration of interest u/s 234B.

Issue 1 - Addition from amount received from HDFC Chubb:
During assessment, Assessing Officer noted sum offered by assessee as 'Technical service Charges' and 'Network Changes'. Assessee received amounts from HDFC Chubb for procurement of software licenses and reimbursement of expenses. Assessing Officer considered these amounts as income of assessee. CIT(A) found that payment made on behalf of HDFC Chubb was reimbursement and not income. Tribunal confirmed CIT(A)'s decision based on Double Taxation Avoidance Agreement between India and Singapore, where payment was made on behalf of HDFC Chubb and was a case of reimbursement. Tax was already deducted at source, and therefore, the addition was deleted.

Issue 2 - Restoration of interest u/s 234B:
Levy under section 234B was deleted by CIT(A) as interest u/s 234B is not chargeable to the extent of tax deductible for non-resident Indians. Tribunal confirmed CIT(A)'s decision based on the precedent set by the Special Bench of the Tribunal in the case of Motorola Inc. vs. DCIT. Consequently, the appeal by Revenue was dismissed.

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