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2020 (12) TMI 570 - HC - Income TaxTDS u/s 195 - 'assessee in default' under Section 201(1) - expenses incurred by the assessee for hotel and traveling expenses - Expenses incurred towards salary - whether the same can be treated as expenses for providing technical services? - secondment agreement - As submitted that mere deputation of the employees doesn’t amount to making available technical Know-How - HELD THAT:- Assessee had entered into a secondment agreement for securing services to assist assessee in its business. The expenses incurred by the seconded employees which were reimbursed by the assessee is not liable to deduction to tax at source and the aforesaid amount could not be considered as 'fees for technical services' - secondment agreement constitutes an independent contract of services in respect of employment with assessee. From the perusal of the key features of the agreement, which have been reproduced by the Commissioner of Income Tax (Appeals), it is evident that the seconded employees have to work at such place as the assessee may instruct and the employees have to function under the control, direction and supervision of the assessee and in accordance with the policies, rules and guidelines applicable to the employees of the assessee. The employees in their capacity as employees of the assessee had to control and supervise the activities of Msource India Pvt. Ltd. Therefore, the assessee for all practical purposes has to be treated as employer of the seconded employees. There is no obligation in law for deduction of tax at source on payments made for reimbursement of costs incurred by a non resident enterprise and therefore, the amount paid by the assessee was not to suffer tax deducted at source under Section 195. Similar view has been taken by High Court of Delhi in HCL INFO SYSTEM LTD. [2004 (1) TMI 16 - DELHI HIGH COURT] in respect of salaries paid to foreign technicians on behalf of the assessee. - Decided in favour of assessee.
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