9911796707
TMI Blog2025 (3) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to issue a Certificate under Section 195 (2) of I.T. Act to the effect of 'Nil Tax Deduction at Source' as regards the petitioner's application dated 15.01.2020." 2. FACTS IN BRIEF: 2.1 Assessee, an Indian Company is a subsidiary of a foreign entity in Singapore. The said foreign entity had entered into Inter Company Master Service Agreement with Holding Company Walmart Inc, Delaware, which is a USA entity. This US entity provides services to various affiliates across the globe pursuant to Master Service Agreement and accordingly the Walmart seconded its employees to the Assessee Company. For the seconded service, the Assessee - company having deducted the TDS remitted the salary amount to the US entity by way of reimbursement. 2.2 The Assessing Officer having examined the nature of services rendered by the seconded employees to the Assessee-Company in the light of Double Taxation Avoiding Agreement under the shadow of Income Tax Act, 1961 concluded that the employer-employee relationship between the seconded employees and the US entity continued and therefore, the amount earned as income by the foreign entity in India is liable for levy of tax under Section 195 of the 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same would fall outside the purview of FIS-fees for included service or FTS - fees for technical service. He draws our attention to certain terms of DTAA and Clause 3.1 of MSA. 5. Having heard the learned counsel for the parties and having perused the Appeal papers, we decline indulgence in the matter for the following reasons: 5.1 This being an Intra-Court Appeal, it has its own conventional constraints. The Appellant has to show not only that the impugned judgement is wrong but it is unsustainable. One of the main grounds urged in the Appeal is as to a Coordinate Bench decision in DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) v. ABBEY BUSINESS SERVICES INDIA (P) LTD. [2020] 122 Taxmann.com 174 (Kar), which the learned Single Judge has heavily banked upon, in holding that the Secondment Agreement constitutes an independent contract of service qua the Assessee; it is also stated that the review was filed against the same before the said Bench. Now we are told that the contention of the Revenue having been rejected, the review has been negatived by the Coordinate Bench. As a consequence, law has to be treated as having been rightly declared in ABBEY supra and therefore, the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be read together and that the payer who considers that no withholding obligations do arise in this case u/s 195 (1) as to apply u/s 195 (2) of the 1961 Act seeking determination of his tax liability. Therefore, the application could not have been negatived inter alia on the ground of maintainability, even if the entire sum so paid was not taxable vide TRANSMISSION CORPORATION OF A.P. LTD., v CIT (1999) 239 ITR 587 (SC). Learned Single Judge has rightly observed that application u/s 197(2) has to be made by the recipient whereas, the application u/s 195 (2) has to be by the payer. A Coordinate Bench of this Court in CIT v. BOVIS LEND LEASE (INDIA) (P.) LTD. (2012) 208 Taxman 168 (Kar) has held that Section 195 (2) application is maintainable even if the entire sum is not taxable and that Section 195 is not applicable to gross receipts inasmuch as, it employs the term "any other sum chargeable under the provisions of this Act" which aspect has been discussed by GE INDIA supra. Therefore, the direction issue the Certificate perfectly accords with the law. 5.4 The contention of the Revenue that the payments made by the Assessee-Company to Walmart Inc., do qualify as FTS and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g available" of technical knowledge." The contention of the Revenue that the Assessee had failed to place all the material to demonstrate the kind of services rendered by the seconded employees were not made available and that they were not requisitioned for the purpose of training the regular employees of the Assessee, is too farfetched to gain acceptance. So is the submission that in the course of training, there would be transmission of technical knowledge, experience, skill, know-how and that would satisfy the requirement of "make available". If that idea was lurking in the mind of the Assessing Officer, he could have called for such information from the sources that be. 5.6 The last contention of the Revenue that as to absence of power to terminate the services of the seconded employees, falsifies the existence of employer employee relationship between the Assessee and the seconded employees, is liable to be rejected in view of what emerges from the perusal of MSA obtaining between the Assessee-Company and Walmart Inc. The terms are as under: "a. the seconded employees, while on secondment, work for and on behalf and for the benefits of the Respondent; b. in terms of C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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