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2021 (2) TMI 1126 - AAR - Income TaxMaintainability of advance ruling application u/s 245R - TDS u/s 192 - Applicant' a company incorporated in India seconds its employees from time to time on long term assignment to other BMW Group entities in various countries such as Germany. Japan, etc, under the terms of Reimbursement Agreement - Residential Status of the employees with whom the Applicant had made transactions - Whether transaction or issue was designed prima facie for avoidance of income tax? - salary of seconded employees - taxes were already paid by the employees in the host country - ruling on allowability or eligibility of claiming a credit to avoid double taxation - HELD THAT:- In Order to claim such bar under clause (iii) of Section 245R(2), there must be some necessary facts pointing to prima facie inference to a design to avoid tax by any illegal or improper means. No such fact has been brought on record by the revenue. Obligation of the Applicant to deduct TDS under section 192 - As per the split payroll arrangement, part of the salary of the seconded employees was paid in India. The Applicant was deducting tax on such part salary paid in India. The Applicant has approached the Authority in respect of its obligation to deduct tax on salary paid to such employees for the years in which they qualify as non-resident in India and for taking credit for tax deducted in foreign country in their year of return to India. We, therefore do not find any merit in the objection raised of the Revenue that the transaction was designed prima facie for avoidance of tax. When the Applicant is merely enquiring about its obligation to deduct TDS or otherwise under section 192 of the Act, it cannot he said that the transaction was for avoidance of tax. The objection of the revenue that there was no clarity of the residential status of the seconded employees is also not correct. There residential status con be ascertained from the period of stay outside India as mentioned in Annexure-I of the application - The revenue has contended that such credit can be taken only by the concerned employees and not by the Applicant as tax-deductor. The objection of the Revenue is on merit of the question which needs to be examined and decided upon in the course of merit hearing. These have no impact on admission of the case as they do not establish that the transaction was designed for avoidance of tax. Similarly, the objection of the revenue that the Applicant was bearing tax on foreign salary of such employees is also not a material fact to decide the admission of the case. In fact this issue has not been raised in the present application and the revenue is free to examine the matter on its merit. In view of the above facts and discussions we do not find any merit in the objection of the Revenue that the transaction or issue was designed prima facie for avoidance of income tax. Accordingly. the objection or the revenue is rejected. application is admitted under section 245R(2)
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