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2013 (11) TMI 317 - AT - Income TaxWhether payment made to employees in india falls under the category of ‘Fees for technical services’ – seconded agreement - Indo-UK Treaty - The 'make available' component - Held that:- Merely providing the employees or assisting the assessee in the business and in the area of consultancy, management etc. would not constitue make available of the services of any technical or consultancy in nature – Reliance has been placed on the judgment of Hon’ble Karnatka High Court in the case of De Beers India Minerals (P.) Ltd. [2012 (5) TMI 191 - KARNATAKA HIGH COURT] - The Hon'ble High Court has observed in para 13 that as per the definition for fee for technical services means payment of any kind to any person in consideration for service or services of technical nature if such services make available technical knowledge, experience, skill know-how or process which enables the person acquiring the services to apply technology contained therein. Thus, expatriation of employee under seconded agreement without transfer of technology would not fall under the term make available as per the article 13(4)(c) of Indo-UK DTAA - Payment in question does not fall under the term fee for technical services as per provisions of Indo-UK DTAA. TDS to be deducted by assessee for payment made of salary to its employees - Assessee company is a Joint Venture Co. between Marks & Spencer PLC and Reliance Retail Limited - The assessee paid ₹ 4,86,6187/- to Marks and Spencer PLC towards salary expenditure of 4 employees deputed to the assessee for providing assistant in the area of management of setting of the business, retail operations, property selection & evaluation, production marketing – Held that:- Payment towards part reimbursement of the salary expenditure which clearly shows that there is not element of profit in the said payment. This claim of the assessee is also supported by the various clauses of the agreement and seconded agreement. Further the entire amount of salary received by these personnel has been subjected to tax in India at the highest average rate of tax. Therefore, there is no question of any default on the part of the assessee. It is pertinent to mention that payment by the assessee is actually payment made to the employees deputed in India under seconded agreement but routed through Marks and Spencer PLC UK. Since the said payment to the employees is already subjected to tax in India, therefore, there is no question of treating the assessee in default for non-deduction of tax at source – Decided against the Revenue.
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