In Gemological Institute International Inc v. DCIT, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the reimbursement of travel and meals cost would not be liable to tax without any profit element.
The assessee, an American Company is engaged in the business of providing gem grading services and other allied and technical services, has received a certain sum towards travel cost, and the same has not been offered to income stating that it is in the nature of reimbursement of travel and meals cost without any profit element, hence, not liable to tax.
However, the Assessing Officer was of the view that the amount claimed to have been received towards reimbursement of cost is in the nature of income of the assessee, hence, taxable. Subsequently, the DRP upheld the order.
The Tribunal noticed that in an earlier case of the assessee wherein a similar issue was discussed, the Tribunal has applied the ratio laid down by the Hon’ble Supreme Court in case of DIT v/s A.P. Moller Maersk, and held that the amount received towards reimbursement of cost cannot be taxed at the hands of the assessee.
Relying on the above decision, the Tribunal deleted the addition and granted relief to the assessee.
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