TMI Blog2021 (2) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voidance of income tax. Accordingly. the objection or the revenue is rejected. application is admitted under section 245R(2) - AAR/NCR/16/2019 - - - Dated:- 17-12-2020 - Narendra Prasad Sinha, Chairman and Ramayan Yadav, Member (Law) Rajan R. Vora, Adv. for the Applicant. Ms. Radha K. Narang for the Respondent. ORDER BMW India Private Limited ( the Applicant') is a company incorporated in India and engaged in manufacturing or automobile and motor cycles. The Applicant 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. Such employees are on a split payroll arrangement under w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which they were non-resident. Accordingly. the Applicant has raised the following two questions in the present application filed on 20th December, 2019: i. Based on Statement of Facts as per Annexure IV , salary paid in India by the Applicant to the employees as referred in Annexure I is not subject to tax in India during Assessment Year 2020-21 as per 15(1) of Double Taxation Avoidance Agreement ( DTAA ) between India Japan and article 15(1) of India-Germany DTAA read with section 90 of the Act. Given the above whether the Applicant is required to deduct Income-tax at source under Section 192 of the Act on salary paid to such employees in India who qualify as non-residents in India? 2. The residential status in India of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparently for avoidance of tax and it was necessary to enquire as to why the Applicant was bearing all the taxes in respect of foreign salary to its seconded employees. Further that by not deducting TDS on the salary paid in India, the Applicant would be avoiding tax. Regarding the Question NO. 2, it was contended that it was not permissible for the Applicant. as a tax-deductor, to take credit of the taxes paid in the host country for its seconded employees. It was responsibility of the concerned seconded employees to take credit the taxes paid in the foreign country on their income. It was submitted that prima facie the employees were avoiding payment of due taxes and, therefore, the application may not be admitted. 4. Mr. Rajan R Vor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact has been brought on record by the revenue, The questions raised in the present application are in respect of obligation of the Applicant to deduct TDS under section 192 of the IT Act. 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 faci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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