TaxTMI 
TaxTMI 
2024 (9) TMI 1624
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee, Company has filed it's return of income for the impugned year on 23.11.2015, declaring current year loss of Rs. 1,69,97,48,675/-. Thereafter the case of the assessee was selected for complete scrutiny through CASS. Accordingly statutory notices under section 142(1) and 143(2) were issued to assessee. 3. During the course of assessment proceedings, the Assessing Officer ( AO) observed that the assessee company entered into international transactions of Rs. 17,43,44,386/- and specified domestic transactions of Rs. 8,59,38,647/- with associate enterprises(AE) during the year and accordingly with the prior approval of Pr.CIT-2, Hyderabad, reference was made to Transfer Pricing Officer for determining the 'Arm's Length Price'. The Trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hy these payments would not attract the provisions of section 40(a)(i) in as much as the assessee has not deducted the TDS in terms of provisions of section 195. In response to the show cause notice, the assessee replied that the assessee has made the payments to the employees in the capacity of employer and employee relationship and not in the capacity of professionals / technicians providing any technical assistance or know-how to the assessee company. The Ld. DRP after perusing the contract of agreement between Assessee and Toshiba Japan vis-à-vis placement of employees in India, formed a view that there was no employer employee relationship between the assessee and secondment employees and the amount which has been paid was in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e has deducted TDS vis-à-vis salaries paid to these employees in terms of provisions of section 192 of the Act at higher rate than the rates prescribed under section 195 of the Act and hence there is no loss to revenue. 10. The learned DR relied upon the orders of the DRP and the learned Assessing Officer. 11. The second issue which the assessee agitated before us is regarding disallowance of Rs. 98.99 lakhs incurred by the assessee towards technology licensing fees. Learned counsel for the assessee pointed out that the assessee has incurred this expenditure on account of royalty paid to it's parent company for exploiting the technology license granted by the parent company to the assessee. However, the TPO has disallowed this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hnology, the usage of the technology by the various entities, the revenue impact from such technology etc. But none of these factors were placed before us. We also note that the assessee failed to prove the benefit derived on such lumpsum payment. The additional evidence filed do not prove these. There is no information supplied to show that the training conducted was in relation to these technology transfers, as there is another transaction for payment towards training. The assessee's attempt to justify the payment with reference to the future sale is untenable for two reasons - (i) The TPO is questioning the lumpsum payment when no benefit is derived. This cannot be answered with reference to future sales, as this payment is not at all li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appointment letters issued to the secondment employees. Perusal of these letters issued by the assessee company to the secondment employees, (paper book pages 205 to 206, 207, 208 and pages 340 to 344), would show that the designation given to these employees have been verified as Director, Chief Adm. Officer, General Manager of Switchgear production division, etc. However, only on the basis of mere designation it cannot be assumed that the payments made to them were in the nature of FTS. The assessee has also filed Form 16A to establish that the assessee had duly deducted TDS on the amount credited to the employees accounts. The assessee has also drawn the attention of the bench towards the agreement entered into between the assessee and....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... additional evidences filed by the assessee before us. We also direct the AO to consider the alternative plea of the assessee. 16. Coming to the next issue i.e. the disallowance of technology fees paid by the assessee to the parent company is concerned, we observe that the DRP/A. O have disallowed these payments on two counts - i) The assessee could not be able to establish with cogent material that the AE had actually rendered services to the assessee. ii) The assessee has also failed to derive any benefits from these payments. So far as the benefits factor is concerned, the courts have time and again held that the TPO/DRP/A.O cannot disallow the genuine expenses on the ground that no benefits have been received by ....