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2014 (2) TMI 783 - DELHI HIGH COURTContravention of Section 8 (1) of the Foreign Exchange Regulation Act, 1973 (‘FERA’) - whether the expatriated employees seconded by the parent corporation to its branch or liaison office in India are required to be paid salaries by such liaison or branch office and further whether the payment made by the parent corporation to its expatriated employees abroad creates any liability on the liaison or branch office to repay the said amount to the parent corporation. Held that:- AOs have erroneously concluded that the expatriate employees of the parent corporation were ‘borrowed employees’ of the Appellants when there was no factual basis for such a conclusion. With the AOs holding that the case of the ED regarding violation of Section 9 (1) (c) FERA was not made out against any of the Appellants, the case regarding violation of Section 8 (1) FERA was untenable since the SCNs in all these cases set out the same allegations to justify the case under both provisions. The question of the Appellants “acquiring” or “otherwise transferring” any foreign exchange as a result of the parent corporation remitting funds to the Appellants for disbursal of the salaries of the employees seconded to them did not arise. Further, the question of the Appellants having to repay the parent corporation the sum paid abroad also did not arise. Factually, there was no attempt made by any of the Appellants to repay any such amount to the foreign corporation. Also, no reasons have been given in any of the AOs for the penalty imposed in terms of Section 50 FERA. Consequently, in all these cases, the determination of the penalty amount by the AOs is also held to be untenable in law. - Decided in favor of appellant.
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