2012 (8) TMI 512

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....The assessee is in the business of producing and selling "Pozzocrete", i.e., product obtained from processing of fly-ash which is a cement replacement product. This product when mixed with cement, improves the quality/bonding strength of cement and reduces the cost of construction. The concept of use of fly-ash in construction is new technique in India. The construction industry was required to be convinced about the concept. Even at Government level lot of efforts were required in convincing the authorities for the same. For doing this job, various experts/professionals were hired and expenses were incurred for their salaries/fees etc., and also on airfare, their stay, telephones, etc. The A.O. in its order u/s. 143(3) dated 04.10.2006 com....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ucted at source as per provisions of DTAA between India and UK. AO was of the opinion that it related more to taxability of Dr.Middleton's income rather than doing no TDS on payment made to him by the assessee. He disagreed with the assessee's submission and was of the opinion that the provisions of sec.40(a)(i)(B) of the Income Tax Act 1961 were applicable. He was of the opinion that this sum of Rs.12,62,585/- was on account of consultancy services which were paid to a non-resident outside India - on which TDS was not done. Hence the AO disallowed this sum. (b) Expenses of Rs.29,33,472/- are reimbursements of the salary cost in respect of the various employees of Dirk European Holdings Ltd., who are deputed to oversee the business op....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....irmed by the Hon Bombay High Court in CIT v/s Siemens Aktiongesellschaft 310 ITR 320. In all the decisions referred above it is held that reimbursement is not in the nature of income. I therefore allow assessee's claim of reimbursement of expenses of salary cost of Rs.29,33,472/- paid to Dirk European Holding Ltd., in favour of the assessee. Addition make by the AO in this regard is deleted." 7. The same has been opposed before us on behalf of the revenue by stating that the CIT(A) was not justified in deleting the disallowance of Rs.29,33,472/- made by the A.O. on account of non-deduction of TDS on reimbursement of the salary cost in respect of various employees of Dirk European Holdings Ltd., deputed to oversee the work of the Company.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....any under the agreement with three Indian companies. The tribunal held that amount was not taxable in India. The Finance Act, 2007, has inserted an Explanation to section 9(2) with retrospective effect from 01.06.1976. As a result, income from receipt of royalty as set out in section 9(1)(vi) are taxable in India whether or not the non-resident has a place of residence or place of business or business action in India. The agreement was entered into before June 1, 1976 and income was received for several assessment years. This income would not be a Royalty from patent, copy rights or trade mark and like, within the meaning of DTAA but would fall under expression 'commercial or industrial profit'. In absence of permanent establishment, suc....