Tribunal grants relief on demurrage expenses & salary costs, directs AO on TDS credit & interest. Revenue's appeals dismissed.

The Tribunal allowed the assessee's appeals in part, granting relief on the disallowance of demurrage expenses and reimbursement of salary costs. The Assessing Officer was directed to examine the claims for TDS credit and levy of interest under section 234D. The revenue's appeals were dismissed, with the Tribunal upholding the CIT(A)'s decisions in favor of the assessee.

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Issues Involved:
1. Disallowance of reimbursement of expenses under section 40(a)(ia) of the Act.
2. Reimbursement of demurrage expenses.
3. Non-grant of credit of taxes deducted at source.
4. Levy of interest under section 234D.
5. Characterization of reimbursement of salary costs as fees for technical services (FTS).

Detailed Analysis:

1. Disallowance of Reimbursement of Expenses under Section 40(a)(ia):
The assessee challenged the disallowance of reimbursement of demurrage expenses made to non-residents, including group entities, on account of non-deduction of taxes at source under section 195. The Tribunal found that this issue had been decided in favor of the assessee in a previous case (A.Y. 2010-11) and followed the decision of the Hon'ble Bombay High Court in CIT v. Dempo and Co. Pvt Ltd., which held that such reimbursements are not subject to tax deduction at source as they are pure cost reimbursements without any service element.

2. Reimbursement of Demurrage Expenses:
The Tribunal examined whether the reimbursement of demurrage charges amounted to fees for technical services (FTS) taxable under section 9(1)(vii) of the Act. The Tribunal referred to the decision in CIT v. Dempo and Co. Pvt Ltd., which clarified that demurrage charges are akin to freight and not FTS. The Tribunal upheld the assessee's claim, noting that the demurrage charges paid were purely reimbursements and did not involve any service element.

3. Non-grant of Credit of Taxes Deducted at Source:
The assessee sought credit for taxes deducted at source amounting to INR 672. The Tribunal directed the Assessing Officer to examine the claim and grant credit as per the law.

4. Levy of Interest under Section 234D:
The assessee challenged the levy of interest under section 234D amounting to INR 22,47,064. The Tribunal noted that this ground is consequential and directed the Assessing Officer to decide the matter in accordance with the law.

5. Characterization of Reimbursement of Salary Costs as Fees for Technical Services (FTS):
The revenue argued that the reimbursement of salary costs for personnel seconded to India should be treated as FTS under section 9(1)(vii) and subject to tax deduction under section 195. The Tribunal referred to its earlier decision in the assessee's case for A.Y. 2010-11, where it was held that such reimbursements are not FTS but are subject to tax deduction under section 192 as salaries. The Tribunal upheld the CIT(A)'s decision, which found that the seconded employees worked under the control and supervision of the assessee in India, and the payments were reimbursements without any markup.

Separate Judgments:
The Tribunal delivered consistent judgments for both A.Y. 2013-14 and A.Y. 2014-15, applying the same principles and decisions to similar issues raised in both years.

Conclusion:
The Tribunal allowed the assessee's appeals in part, granting relief on the disallowance of demurrage expenses and reimbursement of salary costs, while directing the Assessing Officer to examine the claims for TDS credit and levy of interest under section 234D. The revenue's appeals were dismissed, with the Tribunal upholding the CIT(A)'s decisions in favor of the assessee.

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