AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2012 (4) TMI 625
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....transactions of the salary payable to the employee of the foreign company for the services rendered by him to the assessee in India in terms of the secondment agreement between the foreign company and the assessee company. The revenue is aggrieved that the CIT(A) has held that the assessee is not an assessee in default u/s 201(1) and that the interest u/s 201(1A) of the IT Act, 1961 is not leviable. 2.1 The brief facts of the case before us are that the assessee is a company which is engaged in the business of providing data processing, technical consulting, computer programming, technical support and IT enabled services. The Company had entered into separate agreements for programming services, IT enabled products and other services agree....
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....so submitted that the said employee was under the direct control and supervision of the assessee and none of his acts during the course of assignment shall be binding on M/s Ariba USA. It was also submitted that the remittances to M/s Ariba USA cannot be termed as 'Fees for Included Services' (FIS) in terms of Article12(4)(a) of the DTAA between India and USA and also that the amount does not constitute income in the hands of the recipient company. 3. The AO however, was not satisfied with the said contentions of the assessee and held that the payment is made by the assessee to nonresident foreign company for the services rendered by its employee and therefore, tax should have been deducted at source as per the provisions of Sec.195 of the....
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....ed in favour of the assessee by various decisions of this Tribunal which are as follows; 1. M/s IDS Software Solutions (India) Pvt.Ltd., Vs ITO reported in 122 TTJ(Bang.)410 2. ACIT, New Delhi Vs M/s Karlstorz Endoscopy India Pvt.Ltd., in ITA No.2929(Del.)2009 reported in 2010 TII- 135-ITAT-Del-Intl. 4. Having heard both the parties and having considered the rival contentions, we find that the case of the assessee is fairly covered by the decision of the Tribunal (cited supra). The relevant portion of the Tribunal's decision in the case of M/s IDS Software Solutions (India) Pvt.Ltd., is reproduced hereunder; ""13. The next question is whether the amount can be considered as fees for technical services within the meaning of Explanation-2....
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....d also be out of ace in agreement for rendering technical services as it cannot be imagined that a technical person would also be required to act in non-technical capacities under an agreement for rendering technical services. Clause(H), on which considerable reliance was placed by the department to contend that the agreement is one for rendering technical services, is merely a clause ensuring secrecy and confidentiality of the information accessed by the seconded employee in the course of his employment with the assessee company. Such confidentiality extends not only to technical information, which would be the case if the agreement is one for rendering technical services but also to financial or accounting information, price or cost data ....
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....he secondment agreement, the AAR observed that a plain reading of the above clause would show that the Austrian company retained the right over the seconded personnel and had the power to remove any seconded personnel from the assessee company which has control and supervision of the work of the seconded employee namely, Dr. Sundararajan. He was appointed as Managing Director by the Board of Directors of the assessee company and not by IDS. In fact, the assessee company could even terminate the services of Dr. Sundararajan as Managing Director during the period of eight months during which he was to serve the assesseee company. There was no separate foreign collaboration agreement of the kind which was entered into between the Indian and t....