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Judgment
O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
In this case, the appeal arises from order dated 25.11.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), passed by NFAC, Delhi. The Ld. AO noted that certain payments were made by the assessee for travel and conveyance reimbursement, which were considered to be in the nature of Fees for Technical Services (FTS) within the meaning of section 9(1)(vii) of the Act. The Ld. AO found that tax needed to deducted at source of such payments and since the assessee had failed to do so, hence, he invoked section 40(a)(ia) of the Act and thereafter added Rs.91,69,670/- to the total income of the assessee.
The assessee approached the CIT(A), where the Ld. CIT(A) followed the order of ITAT in assessee’s own case for AY 2013-14 and gave relief on the basis of that order (para 5.2 and 5.3 of the impugned order).
The Revenue is aggrieved with this action of Ld. CIT(A) and has approached the ITAT with grounds of appeal as under: -
“1.That the Ld. CIT(A) has erred in deleting the disallowance of Rs.91,59,670/- made by the Assessing Officer under section 40(a)(i) of the Income-tax Act, 1961, In respect of payments. made to General Electric International Inc., USA and Granite Services International Inc., USA (including its branch offices), towards reimbursement of travel and conveyance expenses.
2.That the Ld. CIT(A) has failed to appreciate that the assessee company was engaged in the business of providing technical associate services and consultancy for power plants and had made payments to foreign related parties towards travel and conveyance expenses incurred for skilled manpower rendering technical services at the assessee's project sites in India.
3.That the Ld. CIT(A) has erred in holding that the reimbursement of travel and conveyance expenses was taxable in India, without appreciating that such expenses were incurred in connection with technical services rendered in India by Granite Services International Inc. through its manpower and were inseparably linked to the provision of technical services.
4.That the Ld. CIT(A) has erred in ignoring the contractual terms governing the arrangement between the parties, which clearly provide for rendering of technical services at site locations in India, and therefore, all costs incurred in relation to such services, including travel and conveyance, constitute consideration for fee for technical services (FTS) within the meaning of section 9(1)(vii) of the Act.
5.That the Ld.CIT(A) has failed to appreciate that the assessee did not discharge its onus of proving that the travel and conveyance expenses reimbursed to Granite Services International Inc. were independent of or unrelated to the technical services rendered to the assessee in India.
6.That the Ld. CIT(A) has erred in relying upon the order of the Hon'ble ITAT, Delhi Bench, in the assessee's own case for A.Y. 2013-14, without appreciating that the principle of res judicata does not apply to income-tax proceedings and that each assessment year is a separate and independent unit of assessment.
7.That the Ld. CIT(A) has failed to consider that further appeal against the ITAT order for A.Y. 2013-14 has already been filed by the Department, and therefore, the issue has not attained finality.
8.That the Ld. CIT(A) has erred in ignoring the directions of the Hon'ble Dispute Resolution Panel in the assessee's own case for A.Ys. 2011-12, 2012-13 and 2013-14, wherein under identical facts, payments of similar nature were held to be in the nature of fee for technical services chargeable to tax in India.”
Before us the Ld. DR argued on the basis of findings given by the Ld. AO and drew our attention to pages 10 & 11 of the Ld. AO’s order for the facts and pages 12 & 13 for the case laws relied on by the Ld. AO.
Per contra, the Ld. AR placed on record ITAT’s order in assessee’s own case for AY 2013-14 [M/s Fieldcore Service Solutions International India Private Limited]. It was pointed out that on identical issues the ITAT had adjudicated in favour of the assessee and that order had been followed by the Ld. CIT(A) in granting relief. The Ld. AR read out para 6.10 of the ITAT’s order: -
“6.10Thus, it is evident that in earlier year identical expenses incurred on travel and conveyance and salary on seconded employees has not been found is liable for disallowance u/s 40(a)(ia) of the Act. This action of the Assessing Officer has not been found erroneous or fraud by the higher authorities of the Income Tax Department and, therefore, once the Assessing Officer has accepted that the payments are not liable for disallowance, we do not find any reason for agitating those very payments by the Assessing Officer in the year under consideration. Accordingly, we direct the Assessing Officer to delete the disallowance made under section 40(a)(ia) of the Act on payments reimbursed to foreign AEs towards travel and conveyance cost on salary cost of the seconded employees. The grounds No. 8 & 9 of the appeal are accordingly allowed.”
We have heard both the Ld. AR & DR and have gone through the records before us. We have also perused the ITAT’s order in the assessee’s own case for AY 2013-14 and respectfully following the finding given thereon, especially para 6.10 (supra), we direct the deletion of the impugned addition.
In the result, Revenue’s appeal is dismissed.