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2016 (5) TMI 27

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..... cal person, the consideration paid under the secondment agreement was not “fees for technical services” because the fact that the seconded employee was responsible and subservient to the payer (assessee) and was required to also act as officer or authorized signatory or nominee of the assessee made it inconsistent with an agreement for providing technical services. - Decided against revenue Addition of compensation from customers made by AO on estimate basis - Held that:- This issue has already been remitted back to the file of AO in the immediate preceding year exactly on identical facts by Tribunal in assessee’s own case for Asst. Year 2008-09. and on similar line if the issue is remitted back to the file of the AO that will suffice the matter. On query from the bench, ld. Sr. DR has not objected to the stand of the assessee. Hence, we direct the AO to decide the issue in term of the principles laid down above - ITA No. 1945/Mum/2013 - - - Dated:- 15-4-2016 - Shri R. C. Sharma, AM And Shri Mahavir Singh, JM For the Appellant : Shri Sanjiv Jain, DR For the Respondent : Shri A. V. Sonde P.P. Jayaraman ORDER Per Mahavir Singh, JM This appeal by reven .....

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..... ondment charges of employees seconded by Gail British Gas to work with the assessee. The assessee produced joint venture agreement in respect to secondment charges namely with Gail British Gas. It was explained that there was no mark up in the payments made to them and according to Ld. Counsel, this is clear from secondment agreement. There is also a letter from British Gas which clearly states that all the taxes due in India of the employees seconded to the assessee i.e. Mahanagar Gas Ltd. have been deducted from salary paid to secondees and paid to the Govt. of India. Ld. counsel for the assessee drew our attention to pages 23 and 24 wherein declaration made by British Gas is that taxes due of secondee employees have been paid by them in India and relevant declaration is enclosed at pages 23 and 24 of the assessee s paper book. Ld. counsel for the assessee also drew our attention to secondment agreement enclosed at pages 25 to 38 of the assessee s paper book and particularly at page 35 of assessee s paper book. It is clarified that the IPR rights will remain with British Gas and for this purpose the secondment agreement was entered into. He referred to relevant clauses 16(1) .....

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..... ical statement that British Gas has deducted TDS on these remunerations paid to seconded employees and also deposited in the treasury of the Govt. of India. The TDS on salary payment to expatriate seconded employees to assessee have been given certificate to assessee stating the above fact which is available in the paper book of the assessee. All taxes have been paid by British Gas and second time TDS cannot be deducted on the same amount. For this, Ld. counsel for the assessee drew our attention to CBDT Circular No. 720 dated 30.08.1995 clarifying that any sum payable shall be liable for deduction of tax only under one section. The relevant circular is enclosed at assessee s paper book pages 126, which reads as under: 1120. Payment of any sum shall be liable for deduction of tax only under one section. 1. It has been brought to the notice of the Board that in some cases persons responsible for deducting tax at source are deducting such tax by applying more than one provision for the same payment. In particular, it has been pointed out that the sums paid for carrying out work of advertising are being subjected to deduction of tax at source under section 194C as payment f .....

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..... ndisputed decade old practice, the assessee had bona fide reason to believe that the tax was not deductible at source under section 194J of the Act and, therefore, the Assessing Officer was not justified in invoking section 40(a)(ia) of the Act and disallowing the business expenditure by way of transaction charges incurred by the assessee. 32. Accordingly, we hold that the transaction charges paid by the assessee to the stock exchange constitute fees for technical services covered under section 194J of the Act and, therefore, the assessee was liable to deduct tax at source while crediting the transaction charges to the account of the stock exchange. However, since both the Revenue and the assessee were under the bona fide belief for nearly a decade that tax was not deductible at source on payment of transaction charges, no fault can be found with the assessee in not deducting the tax at source in the assessment year in question and consequently disallowance made by the Assessing Officer under section 40(a)(ia) of the Act in respect of the transaction charges cannot be sustained. We make it clear that we have arrived at the above conclusion in the peculiar facts of the prese .....

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