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2022 (10) TMI 983 - AT - Income TaxTDS u/s 195 - payment made to its parent company - payment is made by the appellant under cost Sharing agreement with its group wherein the BASF SE who is another member in the pool - Whether payment made by the appellant to BASF SE is payment in the nature of fees for technical services? - HELD THAT:- The assessee, on the basis of cost sharing agreement and also in light auditor certificate claimed that payment made to non-resident entity is not liable to be taxed in India and consequently, the assessee need not to deduct TDS in India. We find that although the assessee claims to have reimbursed cost incurred by parent company to provide certain common services without any markup, the said claim of the assessee was not substantiated. Further, if we go through the cost sharing agreement between the assessee and its parent company, the services to be rendered are in the nature of composite services and from the said agreement, it is difficult to ascertain whether they are in the nature of ‘fee for technical services’ or only reimbursement of cost. Although, the assessee strongly relied upon the certificate issued by the Deloitte GmbH and contended that the payment made to the non-resident is only cost incurred by the parent company without any mark-up, which was not supported by any evidence. Therefore, we are of the considered opinion that the issue needs to be re-examined in light of various averments including cost sharing agreement, certificate issued by the Deloitte GmbH and the provisions of section 9(1)(vii) of the Act read with DTAA between India and Germany. The issue needs to go back to the Assessing Officer for further verification and accordingly, we direct the Assessing Officer to re-examine the issue of applicability of TDS as per section 195 of the Act on payment made to non-resident and decide the issue in accordance with law. Appeals filed by the assessee are allowed for statistical purposes.
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