The assessee reimbursed its associated enterprise towards debtor collection charges paid to a non-resident service provider. The Tribunal held that the payment was a pure reimbursement without any profit element and the services neither constituted royalty nor fees for technical services as they did not make available any technical knowledge, skill or know-how. As the non-resident had no permanent establishment in India, the payment was not chargeable to tax in India and no tax was deductible under section 195. Accordingly, no disallowance under section 40(a)(i) was warranted. The assessee reimbursed legal fees paid by its associated enterprise on its behalf. The Tribunal held that where the payment was a pure reimbursement and the recipient had already offered the income to tax, no further tax could be recovered by disallowing the expenditure in the hands of the assessee. The matter was restored to the Assessing Officer to verify whether the payee had already paid tax on the receipt  (AY. 2010-11).