DIRECTOR OF INCOME TAX vs. M/S LOUIS BERGER INTERNATIONAL INC.,

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD WEDNESDAY ,THE TWENTY SEVENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY THREE PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY INCOME TAX TRIBUNAL APPEAL Nos : 387 QF 2016j ITTA Uos. 47 of 2019 and ITTA Nos. 107 108 109 1 10 and 111 ol 2022 |TTA NO. 387 0F 2016 (Income Tax Tribunal Appeal Under Section 260 (A) of the Income Tax Act, I 961 against the order of the Incorne Tax Appellate Tribunal, Hyderabad Bench ' B ', Hyderabad in ITA No 1074 I Hyd/ 2004 for assessment Year 2001-2002 dated 30-08-2010 preferred against the Order of the Commissioner of Income Tax (Appeals)-lll, Hyderabad inlTANo. l13 /ACIT2(2)/ClT (A)-III/ 04-05 dated 30-0F2004 prelerred against the Order of the Asst Commissioner of Income Tax, Circle -2 (2),Hyderabad PANiGIR No. AAACL4067F/ L -034 dated 29-03-2004. Between: Director Of lncome Tax, lnternational Taxatton, Banglore. ... Petitioner AND M/S Louis Berger lnternational lNC., , 8-2-68413130,2nd Floor, Banjala Gre_en,_ _- ._ Road No,12, Banjara Hills, Hyderabad. ...RESPONDENT Counsel for the Appellant: Ms. K. MAMATA CHOUDARY Counsel for the Respondent: SRt DEEPAK CHoPRA FoR SRI ".aa,jfllrf;o .-

|.T.T.A. NO. 47 0F 2019 (Incoure Tax Tribunal Appcal Under Section 1160 (A) oi the Income J'ar Act, l96l against the order of the Income Tax Appellate Tribunal, Hytlerabad Bench ' I) ', Hyderabad in ITA No 720 I Hyd/ 2005 for assessrnenr year 2002_2003 dated 30-6-20 t 0 preferred against the order of the conrmissioner of Income Tax (Appeals )- III, Hyderabad in iTA Nos. 110 &221 / ACI'I 2(2) (A)_m/ 04-05 dated 24-03-2005 preferred against the order of the Asst commissioner of Income Tax, Circle -2 (2), Hyderabad pAN/GIR No. AAACI_4067F1 l, _034 dated 09-02-2005 . Between: Director Of lncome Tax, lnternational Taxation, B;anglore. AND ... Petitioner M/S_ Lours Berger lnternational INC., , 8-2-6A4'30,2nd Floor, Banjara Green, Road No.12, Banjara Hills, Hyderabad ..ReSpOruOeruf Counsel for the Appellant: Ms. K. MAMATA (;HOUDARY Counsel for the Respondent: SRI DEEPAK CF|OPRA FOR SRI A. CHANDRA SHAKER |.T.T.A.NO. 107 0F 2022: Between: (Incorne Tax Tribunal Appeal Under Sectior. 260 (A) of the Incorne Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Hy<Jerabad Bench ' B ', Hyderabad in ITA No 1218/ / Hyd,l 2006 for assessmenr year 2000_ 2001 dated 30-6-2010 preferred against tte order of the comrnissioner of

-3' Income Tax ( Appeals ) - III, Hyderabad in ITA No. 57l ACIT 2 (2) / CIT ( A) -llv 04-05 dated 30-08-2004 pref'erred against the Order of the Asst Commissioner of Income Tax, Circlc -2 (2), Flyderabad PAN/GIR No. AAACL4067Fl L -034 dated 3l-03-2003 Between: Commissioner of lncome Tax - lT & TP , Hyderabad AND I.T.T.A.N O.108 OF 2022i Between: Beween: Petitioner M/S Louis Berger lnternational lnc ,# , 8-2-684130,2nd Floor, Banjara Gleen, Road No.'12, Banjara Hills, Hyderabad ..RESPONDENT Counsel for the Appellant: Ms. K. MAMATA CHOUDARY Counsel for the Respondent: SRI DEEPAK CHOPRA FOR SRI A' CHANDRA SHAKER (lncome Tax Tribunal Appeal Under Section 260 (A) of the lncome Tax Act' 1961 against the order of the lncome Tax Appellate Tribunal' Hyderabad Bench ' B ', Hyderabad in ITA No l2l7l I Hydl 2006 for assessment Year 1998- 1999 dated 30-6-2010 preferred against the Order of the Commissioner of Income Tax ( Appeals ) - III' Hyderabad in ITA No' 250 & 251 tTrl DCIT ( NRC) Delhi/ CIT (A) - III / 04-05 dated 21-04-2005 preferred against the Order of the Deputy Commissioner of lncome Tax' Non Resident Circle' New Delhi (ACIT Cicle-2Q)'/Hyderabad) dated 22-03-200 1' Commissioner of lncome Tax - lT & TP ' Hyderabad Appellant I I I i

1r AND M/S_Louis Berger lnternational .lnc ,# , g-2-6g4t31,2nd Floor, Banjara Green, Road No.12, Banjara Hi[s, Hyderabad. ...RESPONDENT Counsel for the Appe ant: Ms. K. MAMATA C;HOUDARY counsel for the Respondent: sRr DEEPAK cFopRA FoR sRr A.CHANDRA SHAKER t.T T,A.N o. 109 0F 20221 Between: SHAKER (lnconrc Tax Tribunal Appeal Under Sectio, 260 (A) of the Income Tax Act, I 96 r agar'st the order of the Income Tax Appellate Tribu^a[, Flyderabacr Bench ' B '''yderabad in ITA No .r073l / Hyd,t 2004 for assessrnenr year 2000_ 2001 datcd :10-6-2010 preferred against tle order of the comrnissioner of Incorrrc 'fax ( r\ppeals ) _ III, Hyderabad i.r ITA No. 57 / AC'l 2 (2) / CIT (A)- IIL',0,-05 dated 30-0g-2004 preft:rred against the or<rcr of trre Asst. comntrssioner of Income tax, circre -2 (2), Hyderabad dated 3l_03_2003 in PANi GIR No. AAACL4O 67F/ L_0i4 . Commissioner of lncome Tax _ lT & Tp , Hy,Jerabad ... Appellant tri,i:H:,%'J,til llj?ii3yl;jr,l c ,# ,8.2-68.1/30, ,,0 ,,""::.Rt*ilBr,rGl?Tino"a Counset for the Appellant: Ms. K. MAMATI| CHOUDARY Counset for the Respondenr: SRt DEEPAK CHOPRA FOR SRI A. CHANDRA I

I |.T.T.A.NO. 110 0F 2022: (lncome Tax Tribunal Appeal Under Section 260 (A) of the Incorre Tax Acr, I 961 against the order of the Income Tax Appellatc Tribunal, Hyderabad Bench B ', Hyderabad in ITA No .820 / I llydl 2005 for assessrnent Year 1998-99 dated 30-6-2010 preferred against the Order of the Commissioner of Income Tax ( Appeals ) - V, Hyderabad in ITA No. 289 / AC-16 (1) / CIT (A) -V/ 2005 -06 dated 26-09-2006 preferred against the Order of the Asst Commissioner of Income tax, Circle 16 (1) , Hyderabad dated 8-12-2005 in PAN/ GIR No. AAACL4O6TF I L-34 Between: Commissioner of lncome Tax - lT & TP , Hyderabad AND Appellant M/S Louis Berger lnternational lnc ,# , 8-2-684/30, 2nd Floor, Banjara.G. re-e-n, Road No.12, Banjara Hills, Hyderabad. ...RESPONDENT Counsel for the Appellant: Ms. K. MAMATA CHOUDARY Counsel for the Respondent: SRI DEEPAK CHoPRA FOR SRI ".a",.llfllpo |.T.T.A.NO. 111 OF 20221 (lncome Tax Tribunal Appeal Under Section 260 (A) of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Hyderabad Bench ' B ', Hyderabad in ITA No . 721 I lHyrV 2005 for assessment Year 2003-04 dated 30-6-2010 preferred against the order of the comrnissioner of Income Tax ( Appeals ) - III Hyderabad in ITA No' 210 & 221 IACIT 2 (2\ I CIT

L (A) III / 04-05 d:rted 21-03-2005 prefened againsr rhe order of trre Asst. conrnrissioner- of I.coure fax, circre -2 (2) , Llyderabad dated l5-02-200.5 in PAN/ GIR No ,\AACL4067L:/L_034 . Between: Commissioner of lncome Tax _ lT & Tp , Hyderabad ... Appellant AND tvl/S Louis Berqer lnternationaj ,lnc ,# , 8_2_6g413,).2nd Floor, Banjara Green. Road No.12, Banjara Hi s. Hyderabad ...RESPONDENT Counsel for the Appellant Ms. K. MAMATACHOUDARY Gounset for the Respondent: SRI DEEPAK CH,CPRA FOR SRI A. CHANDRA SHAKER The Court made the following Common order

trW ,/ THE HON'BLE SRI JUSTICE P,SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY ITTA No.387 of 2016: ITTA No.47 of2019 and ITTA Nos.1O7. 108,109, 11O and I1l of 2o22 COMMON JUDGMEI{T:- r Hon'ble Sn Justice P.SAM KOSHY) Since common issu/e arise in these batch of appeais, they are being decided by way of this common judgment. 2. Heard Ms. K. Mamata Choudary, learned Standing Counsei for Income Tax Department appearing for the appellant and Mr. Deepak Chopra, learned counsel appearing on behalf of Mr. A. Chandra Shaker, learned counsel lor the respondent. 3. For convenience, the facts in ITTA No.107 of 2022 are taken up as the lead case. 4. ITTA No. 107 of 2022 is f-rled by thc appellart challenging the common judgment datecl 3O.O6.2010 passed by the Income Tax Appelate Tribunal, Hyderabad 'B' Bench, Hyderabad, in ITA.No. l2ISlHyd/2006 for the assessment ycar' 2OOO-200 1.

2 '.i'r; 5. Tire Income Tax l\Ppeliatc Triltur:al (for short the "Tribunal") vide its order dated 30'06'2010 had affirmed the orcler passed by the Commis:;roner of Income-Tax (Appeals)-lll holding that the expen'litul'e incurred by the asscssce and which was reimbulsed bY the PrinciPal employer r,r'as held not to be part of the fees for technical ser\/1Ces. incurred in the course and other related exPenses 6. The resPondent/assessee in the instant case was engagerJ. by the National Highwav Authority of india (for short "NHAI") for technical aclvice ancl tcchnical serviccs in the course of execution of constrrrction and road widening project. For the purpose of imparting tire sai'J technical services , the respondent/ assesr;ee haci incurred certain incidental expenditure like of their emPloYees meeting the transPort expenditure on the team of exPerts rvhiclo includes their exPenses of Providing logistics to the members of the resPonde'nt/assessee deputed for providing the technical serv:'ces' The Assessing Officer 't:' { 1 .1

3 included these expenses as part of the fees fbr technical services while passing the assessment order. 7. The order of the Assessing Oflicer was subjected to challenge before the Commissioner of Income_Tax (Appeals)-Il. The Commissioner of Income_Tax (Appeals)_ III on due consideration of the contentions made by the respondent/assessee in the appeal, allowed the same vide order dated 30.08.2004 holding that the expenditure incurred by the respondent/assessee in providing the technica.l services to NHAI would not be part of the fees for technical services. The said order was further challenged by appellant before the Tribunal. The Tribunal also concurred with the finding of the Commissioner of Income-Tax Appeals-Ill and had rejected the appeal of the Revenue leading to filing of the present appeal. 8. Learned counsel for the appellatt contended that the Commissioner of Income-Tax Appeals_Ill as also the Tribunal have erred in holding that the amount initiaJly incurred by the respondent/assessee and reimbursed by

4 1 the principal employer does uot partake the character of fees for techr-rica'l services The Crlunsel insisted upou holding tha-r- the said anlount which has been reimbursed to the responclent/assessee by the NLIAI does in fact partakes all the char-acters of experrditure incurred by the principal employer and not one which has been incurred by the respondent/asscssee The.refore' the rate of tax ought to have been 2Oo/o and not l11o with other coilsequential orders' g. After having clue consideration of the contentions put forth by the learned counsel for the appellant' at this juncture, what is necessary to tal<e note of the fact is that the very sarrle contentions of the appellant have been duly considered by the Tribunal vrherein the Tribunal in paragraph Nos.21, 23 and 27 of the said order held as under: "21. We haue olso carefullu qone through the judgement of ,i. Oaii uiii-ciurt in cir tis." rrutustrial Engineeing .Projects ";:;";;;'it'6ssi zoz IrR 1014' It the case before the Delti ';;;;""';,';;; ott"tt" had agreement .lDith M/ S'E^TAG' a ;'J,:.';;;;;ls, 7o' "nd"nnq si-ices rhe ussessee uoutd receiue o minimum sum of hs'-l'2O'OOO per month lor the senices rendered' besides o{ii'u"^tnt of certain costs and Z7;;:;;r;';;i".'*"i r'a th" o"""' uthite rendenng the ,l

sffiil@7 'i_:ri'i-' / .* - ./ 5 :". -,,", r" :s . per the ogreement. The Income_tax Offtcer dtsalLowed the expenses incuned,. On appeal bu the assessee before the Delhi Bench of this Tibunai,'it w"i hed that the reimbursement of the expendifure d.id not constitute income as the expenses were incuned on behalf of the Surss company. On a reference to the Delhi High Coirt-at tlle instance;f t;e Rlue.nu1 the Delhi High Court afier consid.eing the judgement of the Apex Court in the case of CIT Vs. iejaji' Fatrasram Kharautalla Ltd. (1968) 6Z ITR 95 hetd that the ieimbursabte expenditure cannot form part of the taxable income. Accordinglg, it tuas held that the reimbursable expenditures are. lo be excluded from the total income. In uiew of this judgement of the Delhi Htgh Court, tn our opinion, the reimbursable expenditure receiued" by the assesiee for the purpose of rendeing seruices cannot form part of tie total income. Therefore, it has to be exclud.ed. 23. We haue also carefultg gone through the jud_gement of the Apex Court in the case of CIT Vs. Tejaji Farasram Khnraualla Ltd. (1968) 67 ITR 95. The ossessee before the Apex Court acted as a selling agent of Ciba (India) Ltd.. The assessee u-tas entitled to commission oJ 12.5o/o on sales. Out of the 12.5%, 7.5ok was treated as selling commission in lieu of the contingency expenditure would form patt of the totat income or not. The Apex Court fLeH thnt 5o/o of tle expen ses in lieu of the contingencg expenses was for the expenditure incuned in the perfonnance of the duttes of the respondent as setling agent. Therefore, it will not form part of the to-xabLe income. Accordingly, the same uas exempt. In uiew of thb judgement of the Apex Court, the reimbursable expenditure rece[ued by the assessee in pursuance to the agreement cannot form part of the toxable incom.e. Accordinglg, the same has to be excluded. 27. For the purpose of claiming exemptton u/s. 10(6A) an agreement needs to be entered into afier 31d dag of March. 1976 but before the l.t dag of June, 2OO2 in relation to matters included in the industial policg of the Gouemment of India. In anA other case the approual of the Aouernment is required. The industial policg of Couemment of India as disclosed in the gear 1 991 clearlg sLaws that deuelopment of infrastructure is one of th.e policg included as item No.1 1. The contention of the leamed Deportment Representatiue b that the policA u.)a-s d.eclared in the gear 1991. Therefore, it is outdated. The teamed Departmental Representatiue hou-)euer, could not bring to the notice of the Bench ang latest policg whtch wos declared in the gear releuant for the assessment gear under consid.eration. Moreouer, as rightlg pointed out bg the learned aunsel for the assesseg the Assessing Olficer himsetf refers

6 b thc uery scme indusliot oolicu in sonLe of lhe ass'e'ssmcnl ';";;,;;';";i^'ia.'*'i"i!fi;iii,i;";"!:;3:?,i:;rT;",;2 ialcing note o[. '!." '.lu.'.,oar. taeJ is ,ryplicabte 1or tne aear Gouenlment of lndia n tne ! ',liZ' " i . " "", i i"' i io n o t' o'i' i, " i ;; : i: ;l: :::; :i " ; !,: :;' ":;' ?X: of nfi o-structu.'3 .lt o"",,^oJ,o.ir",-'i*, 'iu". ti iin" poti"y. 6ou"^^"nt of lndia as ar once deuelopment o1 ''1'o.si.:'icture fatis in the tdustrial policy of the Gouemment oJ tncll];;;;''' ;t itfitlg s,ubmilted bg the llorned- counsel for rhe;t;"t;";' aJ'priual' oI the Cenlro-l Gouernntent is not a p" '"q'i"^"nt for daiming exemptlotl liil' ,'oiZ^t '.1 ii" en riJ'"1i'o' in our opinio'n' s'ince the dsuelopmcttl of in1'ostrctu'ie ialts tuittin the industrtal policy ^f oouernment of Indn lip.j(ji' tip'' ol .maA not be required "ior claiming exemptior u/ s' 10(64) oJ ttte ltcl 10. The hnding given by the Tribunai referred to in the preceding paragraphs would cleally give an inclication of the fact that the Tribuna1 has duly considered these aspects and have reached to the conclusion that the arrlount of reimbursement maile by the NHAI to the respondent/ assessee was towarcls the expenses that was incurred by the respondent/assessee on their team of experts in the cotlrse of providing technical services and therefore it does not amount to the fees for the technical servlces. 11. Thus, there is clear concurrrent hnding of fact by the two authorities below' Moreover' the said frnding also is based upon the judicial precedents laid down in the

ig:i. 7 judgment of the Honble Supreme Court in the case of CIT Vs. Tejaji Farq.sram Khqrawalla Ltd..l and. a couple of decisions rendered by the High Court of Deihi on almost similar set of facts and other High Courts also. 12. In view of the same, we do not hnd €rny error on the part of the Tribunal in deciding the appeals against the appellant and concurring with the order passed by the Commissioner of Income-Tax Appeals-Ill. Moreover, we a-lso do not find any substantial question of law made out in the given factual backdrop. 13. Accordingly, all these appeals fail and are rejected. No costs. Consequently, miscellaneous .petitions pending, if any, shall stand closed. * trqg0 6+-L.t ? 1S SD/.B.S.CHIRANJEEVI JOINT REGISTRAR //TRUE COPY// To sEcTtoN oFFtcER 1. The lncome Tax Appellate Tribunal, Ilyderabad Bench ' B ', Hyderabad. 2. The Commissioner of Income Tax ( Appeals ) - III Hyderabad. 3. The Asst. Commissioner of Income Tax, Circle -2 (2) , Eyderabad 4. The Assistant Commissioner of Income Tax Circle-16(1), Hyderabad. 5. The Commissioncr of lncome Tax ( Appeals ) - V, Hyderabad 6. One CC to Ms. . K MAMATA CHOUDHARY, Advocate [OPUC] 7. One CC to SRl. A. CHANDRA SHAKER, Advocate [OPUC] 8. Two CD Copies ?ma" j

HIGH COURT DATED:2710912023 COMMON JUDGMENT INCOME TAX TRIBUNAL APPEAL No: 387 oF 2016 ITTA Nos. 107 108 109 110 and 111 of 2O22 AI,L THE APPEALS ARE RUECTED WITHOUT COSTS Pr'lC1, 26\ro1>.r I .I S .)o L) aj : 1 t:ijI 2 l1 ), r.. '1,,: ITTA No. 47 ot 2019 and l I i i i l I I I I I i I I I -.:r'