TMI Blog2012 (4) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... n, JCIT For the Respondent: Shri Kaushik Mukerjee,CA O R D E R PER SMT. P. MADHAVI DEVI, JM; This appeal by the revenue relates to assessment year 2006-07. 2. In this appeal, the revenue is aggrieved by the order of the CIT(A) in allowing the assessee s claim by holding that the assessee is not liable to deduct tax at source while making the payment to the foreign companies on the transactions of the salary payable to the employee of the foreign company for the services rendered by him to the assessee in India in terms of the secondment agreement between the foreign company and the assessee company. The revenue is aggrieved that the CIT(A) has held that the assessee is not an assessee in default u/s 201(1) and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company has remitted an amount of ₹ 18,80,778/- to M/s Ariba USA which is after deduction of TDS amount of ₹ 8,69,715/- which has been paid to the Government account. It is also submitted that the salary cost to Shri Narayan Venkatesan has been duly accounted for under the head Salaries and Allowances and that the salary cost discharged by M/s Ariba USA is for administrative convenience only. It was also submitted that the said employee was under the direct control and supervision of the assessee and none of his acts during the course of assignment shall be binding on M/s Ariba USA. It was also submitted that the remittances to M/s Ariba USA cannot be termed as Fees for Included Services (FIS) in terms of Article12(4)(a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He thus, held that the AO s action of treating the same amount as FTS which was already taxed as salary in the hands of the recipient is not correct. He accordingly, allowed the assessee s appeal. Aggrieved, the revenue is in appeal before us. 3.1 Both the parties advanced their arguments in support of their contentions. 3.2 The learned counsel for the assesseee also brought to our notice that the said issue is covered in favour of the assessee by various decisions of this Tribunal which are as follows; 1. M/s IDS Software Solutions (India) Pvt.Ltd., Vs ITO reported in 122 TTJ(Bang.)410 2. ACIT, New Delhi Vs M/s Karlstorz Endoscopy India Pvt.Ltd., in ITA No.2929(Del.)2009 reported in 2010 TII- 135-ITAT-Del-Intl. 4. Having h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical services. For example, clauses (A) to (C) of Article II make the seconded employee responsible and subservient to the assessee companywhich cannot be the case if the agreement is for providing technical services by IDS to the assesse company. Similarly, clause(E) which requires the seconded employee to also act as officer or authorized signatory or nominee or in any other lawful personal capacity for the assessee company, would also be out of ace in agreement for rendering technical services as it cannot be imagined that a technical person would also be required to act in non-technical capacities under an agreement for rendering technical services. Clause(H), on which considerable reliance was placed by the department to contend that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support technology. Article 4.2 required the Austrian company to offer the services of its technical experts to the assessee for working on the project that was being executed. There was another agreement called the secondment agreement between the India and Austrian companies and it inter-alia provided that the Austrian company can at any time remove the seconded person and replace him with similarly qualified persons. Referring to the secondment agreement, the AAR observed that a plain reading of the above clause would show that the Austrian company retained the right over the seconded personnel and had the power to remove any seconded personnel from the assessee company which has control and supervision of the work of the seconded employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. 16. For the above reasons, we are also not able to hold that the payment to IDS represented fees for technical services. 17. In the result, we hold that the assesseee was not liable to deduct tax from the amount representing reimbursement of the salary paid by IDS to Dr. Sundararajan while remitting the same to IDS u/s 195 of the IT Act. The salary paid by the assessee to Dr.Sundararajan has been made the subject of tax deducted at source and the same has been remitted to the Indian Income tax authorities . In view of the same, we do not see any reason to interfere with the order of the CIT(A) and the grounds of appeal raised are rejected. 5. In the result, the revenue s appeal is dismissed. Order pronounced in the open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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