TaxTMI 
TaxTMI 
2015 (11) TMI 113
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....e has raised four elaborate grounds in its appeal; however the cruxes of the issues are that:- 1. The Ld. CIT (A) has erred in directing the AO to delete the disallowance made invoking the provisions of section 40(a)(ia) of the Act for not deducting tax on the payment of Rs. 1,13,51,946/- made to the seconded employees from the assessee's subsidiary company which is to be reimbursed by the assessee's subsidiary company. 2. The Ld. CIT (A) had erred in directing the A.O to delete the disallowance made by invoking Section-14A of the Act and Rule 8D of the Rules. 3. The brief facts of the case are that the assessee company is engaged in the business of consultancy & export agency services, investments, Marketing & Project Services, Bi....
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....reasons:- "i. There exist a separate agreement to render services to the assessee company by the other party i.e. M/s.Simpson & C. Ltd. ii. Being both the parties are different legal entities and one party rendered services to other party, the provisions of Chapter XVII-B is attracted. iii. None of the employees or man power which rendered the services under this head of expenses are in the roll of the assessee company and in fact they are all employees of the other party i.e. M/s. Simpson & Co. Ltd. which rendered the services. iv. The arrangement or agreements are between two legal entities and not between the assessee and the employees. Even in the latter case, the assessee has to deduct the TDS as per Law but failed to compl....
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.... the assessee's subsidiary company on behalf of its subsidiary company which is to be reimbursed to the assessee company by the assessee's subsidiary company. The tax is deducted at source directly by the assessee's subsidiary company for the payment made by the assessee company to the seconded employees from the assessee's subsidiary company. It was therefore argued that the assessee is not bound to deduct tax on such advances made by the assessee company on behalf of the assessee's subsidiary company which is reimbursable. We find merit in the contention of the assessee. If tax is already deducted at source on the salary paid to the seconded employees by the assessee's subsidiary company, then once again deduction of tax on such salary pa....
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....rely doing his duty as an employee. The meaning assigned to the expression "fees for technical services" is the same as is given in Expln 2 to s. 9(l)(vii). The case of the Revenue is that the persons who were deputed were technically qualified to do the job they were performing and hence the amount which was reimbursed to IHC was nothing but fees for technical services. For a moment, if this argument of the Revenue is accepted, even then it cannot fail within the scope of "fees for technical services". This is because Expln. 2 clearly excludes consideration which would be income of the recipient chargeable under the head "salaries". In the present case, it is not in dispute that what is reimbursed by the assessee is the actual salary of th....
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....it is not disputed that the deputed persons, wherever liable, have paid the tax on the salaries received by them and hence no further tax can be collected from the assessee. The order passed under ss. 201, and 201(1A) is bad in law and the CIT(A) had also erred in confirming the same. Needless to add, since the assessee was not liable to deduct tax under s. 194J, there is no question of levying any interest also under s. 201(1A)." Since the Both the Revenue Authorities has not examined the following aspects and held the issue against and in favour of the assessee; i.e., whether the tax has been duly deducted at source by the assessee's subsidiary company on the payment made by the assessee to the seconded employees from the assessee's su....