Reimbursement of travel and conveyance expenses not treated as fees for technical services; section 40(a)(ia) disallowance deleted.

Reimbursement of travel and conveyance expenses paid to foreign associated enterprises was held not to fall within the disallowance under section 40(a)(ia) merely because the Assessing Officer treated it as fees for technical services under section 9(1)(vii). The Tribunal followed its earlier year's decision on identical facts, found no reason to depart from that view, and held the disallowance unsustainable; the addition was deleted in favour of the assessee.

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Issues: Whether the disallowance made under section 40(a)(ia) of the Income-tax Act, 1961 on reimbursement of travel and conveyance expenses paid to foreign associated enterprises, treated by the Assessing Officer as fees for technical services under section 9(1)(vii), was sustainable.

Analysis: The payments in question were identical to those considered in the assessee's own earlier year, where the Tribunal had already held that such travel and conveyance reimbursements were not liable to disallowance under section 40(a)(ia). The appellate order under challenge followed that earlier decision, and the Tribunal found no reason to depart from the view already taken on the same set of facts.

Conclusion: The disallowance was not sustainable and the impugned addition was deleted in favour of the assessee.

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