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2022 (9) TMI 1251 - AT - Income TaxTDS u/s 195 - disallowance of extended warranted expenses paid by the assessee - profit attributable to the PE in India - disallowance u/s 40(a)(i) due to non-deduction of tax at source - dependent agent PE - HELD THAT:- The extended warranty is an additional feature provided to the customers at their option. There is no compulsion on the customers to buy extended warranty. If some customers agree for extended warranty, the assessee purchases such warranty from CCPL, a Bentley recommended company, the consideration received from the customers towards the extended warranty is remitted to CCPL after retaining a part of it Extended warranties are in the nature of security and assurance to customers against any kind of defect/repair after lapse of original warranty and purely optional in nature. Material on record reveal, while entering into contracts for extended warranty, though, the assessee purchases such warranty from CCPL at a particular price, however, it independently negotiates price with the customers. Commissioner (Appeals) has referred to specific instances of invoices raised by the assessee to indicate that the price at which the extended warranty is sold to the customers is different from the warranty claimed to CCPL - there is no compulsion on the assessee to buy extended warranty only from CCPL or any other Bentley recommended party. Technically, assessee can buy extended warranty from anyone, subject to availability of original Bentley spares and accessories - the sales invoices raised by assessee to the Indian customers towards extended warranty are in its own name and does not mention the name of CCPL. Therefore, the privity of contract is between the assessee and Indian customers, wherein, CCPL has no role to play. The aforesaid factual position emerging on record could not be effectively controverted by the Revenue through proper evidence. Thus, in our view, the factual finding recorded by Commissioner (Appeals), to the effect that the assessee cannot be construed as a dependent agent PE of CCPL, deserves to be affirmed in absence of any contrary material brought on record by Revenue. Accordingly, we do so. Ground raised is dismissed.
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