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2022 (4) TMI 1444 - ITAT BANGALORE
TDS u/s 195 - payments made to non-residents for salary costs - amount reimbursed by the assessee to the overseas entity - 'assessee in default' under section 201(1) for non-deduction of taxes at source - HELD THAT:- The amount reimbursed by the assessee to the overseas entity cannot be subjected to tax in India as there does not involve any element of income embedded in it.
Respectfully following the above views expressed in DIT vs. Abbey Business Services India (P.) Ltd [2020 (12) TMI 570 - KARNATAKA HIGH COURT], Hon'ble AAR in Cholamandalam MS General Insurance Co. Ltd. [2009 (1) TMI 19 - AUTHORITY FOR ADVANCE RULINGS], Hon'ble Bombay High Court in case of Marks & Spencer Reliance India Pvt. Ltd. [2017 (5) TMI 1638 - BOMBAY HIGH COURT], Hon'ble Delhi High Court in the case of DIT Vs. HCL Infosystems Ltd. [2004 (1) TMI 16 - DELHI HIGH COURT], Coordinate bench of this Tribunal in case of IDS Software Solutions [2009 (1) TMI 363 - ITAT BANGALORE-A], Hon'ble Pune Tribunal in case of M/s. Faurecia Automative Holding [2019 (7) TMI 402 - ITAT PUNE], Hon'ble Ahmedabad Tribunal in the case of Burt Hill Designs (P) Ltd. [2017 (3) TMI 1515 - ITAT AHMEDABAD] we are of the view that the reimbursement made by the assessee in India to overseas entity, towards the seconded employees cannot be regarded as "Fee For technical Services"
Once there is no violation of provision of section 195, assessee cannot be held to be an assessee in default under section 201(1) of the Act for all the years under consideration. We therefore direct the Ld. AO to delete the interest levied under section 201(1A) of the Act for all the years under consideration. Assessee appeal allowed.