TMI Blog2020 (8) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In our considered opinion, the question of receiving any interest on receivables does not arise. Considering the facts of the assessee in hand, in totality, we do not find any merit in the TP adjustment of ₹ 22.16 lakhs and the same is, accordingly, directed to be deleted. TDS u/s 192 or 195 - salary paid to expatriates - Failure of non-deduction of tax at source - assessee explained that reimbursement of salary cost to expatriate employees is not taxable as FIS, both under the provisions of the Act and relevant DTAA, and no withholding tax was required on the same - HELD THAT:- As perused the TDS certificates, Forms 15CA and 15CB, tax deducted by the assessee and all these documents are part of the paper book. There is no dispute that the assessee has deducted tax at source u/s 192 of the Act. On the given facts of the case, we are of the considered opinion that the provisions of Section 195 of the Act do not apply. Considering the facts of the case in totality, in light of judicial decisions referred to hereinabove, we do not find any merit in the disallowance made by the Assessing Officer/DRP. We, accordingly, direct for deletion of addition . - ITA No. 9765/DEL/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the mistake and pass final assessment order in the name of amalgamated company BIPL. 5. Section 144C(1) of the Act provides that The Assessing Officer shall forward a draft of the proposed order of assessment to the eligible assessee . Sub-section (15)(b) defines Eligible Assessee as Any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA of the Act. 6. As mentioned elsewhere, the TPO has framed the order u/s 92CA(3) of the Act in the name of BIPL, the appellant and as per the definition of Eligible assessee BIPL is the eligible assessee. However, the Assessing Officer chose to pass the assessment order in the name of the non-existent company BICIPL, which was dissolved on 15.02.2018. 7. Section 2, sub-section (31) defines Person which includes a company. On the date of issuing draft assessment order, the company BICIPL did not exist. Moreover, as per the Scheme u/s 144C(1) and (3), the Assessing Officer becomes Functus Officioafter passing draft assessment order which means that only the assessee can file objections or accept the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs. Further, if we go a little deeper into the scheme of Sec. 144C of the Act and consider subsection (3) of Sec. 144C of the Act, which reads as under (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if , it envisages that an assessment has to be completed on the basis of a draft assessment order, thereby making it apparent that the draft order is a core component of assessment. In fact, the assessee has an option to accept the draft order proposed by the Assessing Officer as per Sec. 144C(2) of the Act. In such a case, the Assessing Officer will proceed to pass the final assessment order under Section 143(3) r.w.s. 144C(13) of the Act without making any further variation in income/loss as assessed by him in the draft assessment order. In such a situation, the Assessing Officer would not have the option to amend the draft order of assessment proposed by him. Thus, looked at from the angle of the Assessing Officer, the draft assessment order is in fact the final assessment of income/loss of the assessee since only the assessee has been accorded a right under Section 144C(2) to file objections before the DRP. Further, the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. In the background of such peculiar circumstances, the Hon'ble High Court took a view that mere incorrect mentioning of the name in the notice was a defect curable in terms of Sec. 292B of the Act. However, the facts in the case before us are in complete contrast. In fact, in the course of hearing, the Ld. DR was specifically asked to point out any instance in the present case where the Department had correctly issued any notice, etc. in the name of the successor company before passing of the transfer pricing order by the TPO under Section 92CA(3) of the Act or the draft assessment order by the Assessing Officer. Nothing was brought on record by the Department in this regard and, therefore, in our view, the ratio of the judgment of the Hon'ble Delhi High Court in the case of Sky Light Hospitality LLP (supra) is not attracted to the facts of the present case. 9. Again in the case of Nokia Solutions and Network India Pvt Ltd 402 ITR 21 [Delhi], the Hon'ble High Court has held as under: 5. The assessee, which is represented on advance notice, urges that the DRP could not have directed assessments to be completed in the manner that it did, given that the remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. The amalgamation is a blending of two or more 30 [2019] 260 Taxman 412 (Del.) 31 (2019) 261 Taxman 137 (Guj) existing undertakings into one undertaking, the shareholders of each blending company become substantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly amalgamation does not cover the mere acquisition by a company of the share capital of other company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See: Halsbury's Laws of England (4th edition volume 7 para 1539). Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity. (iv) Fourthly, upon the amalgamating company ceasing to exist, it cannot be regarded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue is in respect of TP adjustment of ₹ 22.16 lakhs on account of outstanding receivables. 16. Facts on record show that, according to the TPO, payment for invoices raised by the assessee were not received within the time stipulated as per service agreement with the AEs which was 30 days. Therefore, according to the TPO, such outstanding amount/delayed payments are in the nature of unsecured loans/advances to the AEs and by treating the same as advance, the TPO imputed interest rate of 4.3405%, being six months interest rate of LIBOR plus 400 basis points on the outstanding receivables from AEs and, accordingly, proposed, an adjustment of ₹ 22, 96, 268/-. 17. Objections were raised before the DRP and the DRP was pleased, partially accepting the assessee s contention and allowed interest on outstanding payment to be netted off against interest on outstanding receivables and, accordingly, adjustment was reduced to ₹ 22, 16, 059/-. 18. Before us, the ld. counsel for the assessee vehemently stated that interest on receivables is not a separate international transaction. For this proportion, reliance was placed on the decision of the Bangalore Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further explained that the assessee was a real and economic employer of expatriate employees, as these employees were under the control of the company without any relation/connection with the AEs and salary expenses have been borne by the assessee on which the appropriate taxes were duly deducted and deposited u/s 192 of the Act. It was strongly contended that reimbursement of cost charges of salary of expatriate employees is not taxable as FTS/FIS. 24. The Assessing Officer was not convinced with the submissions of the assessee and referring to the terms of secondment agreement and drawing support from the decision of the Hon'ble High Court in the case of CentricaIndia Offshore India Ltd 364ITR 336 and further referring to various judicial decisions, the Assessing Officer finally came to the conclusion that the assessee has failed to deduct tax at source on the expenditure towards salaries and other allowances and invoking the provisions of section 40(a)(i) of the Act, the Assessing Officer made disallowance of ₹ 56, 58, 19, 799/-. 25. Objections were raised before the DRP but were of no avail. 26. Before us, the ld. counsel for the assessee vehemently stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of the paper book, and as per clause1.1, it is provided that the secondees have expressed their willingness to be deputed to BIPICL [the appellant] and TBC [AE] have agreed to release these employees to BIPICL. It is provided that TBC will facilitate payment of salaries in secondees home country on behalf of BICIPL. Under the head employment status, it is provided that the secondees shall be working for BICIPL and will be under supervision, control and management of BICIPL as an employee of BICIPL. 31. It is clear from the afore-stated relevant clauses that the secondees were, in fact, in employment of the appellant and as per the terms, the A was paying salaries at the home country of the secondees and, therefore, there was reimbursement by the appellant. These facts clearly show that the assessee has been paying to its own employees and this fact alone clearly distinguishes the facts of the decision in the case of Centrica India Offshore Ltd [supra]. 32. The co-ordinate bench in the case of AT T Communication Services India Pvt Ltd. [supra], distinguishing the decision of the Hon'ble Delhi High Court in the case of Centrica India Offshore Pvt Ltd [supra], has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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