The Income Tax Appellate Tribunal (ITAT) issued its decision on 6 March 2013 in the case of C.U. Inspections (I) Pvt. Ltd v. DCIT (ITA No. 577/Mum/2011) that payments made to a non-resident third party but routed through the parent company in the Netherlands cannot be considered as mere reimbursement of expenses.
(a) Facts. The Taxpayer (i.e. C.U. Inspections (I) Pvt. Ltd.), an Indian subsidiary of P.S.O. Beheer BV (PSO) in the Netherlands, was engaged in the business of certification of…