TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 978
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the Ld. CIT(A) is right in law in holding that the treatment of free of cost of assets u/s. 28(iv) benefits derived from the business and considering depreciation costs on these free of cost of assets as operating expenses while computing operating profit margin under TP, amounts to double taxation? 2) Whether in the facts and circumstances of the case, the Ld. CIT(A) is right in law to hold that reimbursement made by the assessee to seconded employees is not liable for deduction of TDS under Section 195? 3) Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance made u/ s. 40(a)(i) of the Act in regards to reimbursement payment made by the assessee to seconded employees? 4) Whether in the facts and circumstances of the case, the ld. CIT(A) failed to appreciate that amounts reimbursed by assessee to overseas companies and employees in terms of secondment agreement amounted to fee for technical services liable to tax in India and, thus, assessee was required to deduct tax at source under section 195 of Income Tax Act?" 2. The CO is filed by the assessee on the following grounds:- "1. The order of the learned CIT(A)-12, Ban....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered as benefits arising to assessee and chargeable to tax u/s 28 (iv) of the Act. 5. The assessee submitted that there is no benefit derived by the assessee as these assets are prototypes developed by the AEs and are provided to assessee in order to ensure that services provided by assessee on software development for the said product is meeting the said parameters. Therefore, these are testing equipments or assets and upon completion of the testing, these are re-exported to the AEs or are discarded. These assets are not retained by assessee and therefore there is no benefit derived by the assessee, so no income is chargeable on this count. The assessee also submitted a chart stating the details of assets received on returnable basis and their correct status. The assessee also submitted that assessee has entered into Advance Pricing Agreement and already considered the depreciation on such fixed assets for determination of agreed transfer pricing value of the services. Therefore, if further addition is made, it will amount to double addition. 6. The ld. AO did not accept the explanation of assessee, according to the AO, assessee has derived immense benefit on receiving such asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ponse to show cause notice, the assessee reiterated the same facts and further claimed that the services provided are not fees for technical services and no tax is required to be deducted as per DTAA. 9. The ld. AO rejected the contentions of the assessee. He held that the above services are technical in nature and therefore tax should have been deducted. Failure to do so resulted into disallowance u/s. 40(a)(i) of Rs. 9,59,334. 10. When the matter reached the ld. CIT(A), disallowance was deleted by following the decision of the coordinate Bench in the case of Tesco Bengaluru Pvt. Ltd. (supra) wherein it was held that training services charges cannot be considered as technical, managerial or consultancy in nature and therefore treating the same as fees or technical services by the ld. AO is not acceptable. According to the ld. CIT(A), no tax was required to be deducted u/s. 195 of the Act and consequent disallowance was deleted. 11. So the revenue is aggrieved by the deletion of the above two additions/disallowance. 12. Ground no.1 of the appeal of the revenue is with respect to addition u/s 28(iv) of the Act of Rs. 1,44,73,422 deleted by the ld. CIT (A). 13. The ld. DR explai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the coordinate Bench in the case of ITA No.2387/Bang/ 2019 for AY 2015-16 wherein addition made u/s. 28(iv) on assets received from AEs charged to tax by the revenue authorities was deleted. The ld. CIT(A) has also followed the same decision. 16. The ld. DR could not show us any reason to deviate from the same. 17. Looking to that decision of coordinate bench where the ground before the bench was "The Ld. AO erred in concluding that the assets worth INR 1,64,92,752, received from Tesco Stores Limited on a Free of Cost basis is 'benefit arising from the businesses of the Appellant and chargeable to tax under Section 28(iv) of the Income-tax Act, 1961 ['the Act']" 18. Coordinate bench has held as under: - '11.4 We have heard the rival submissions and perused the materials available on record. We find force in the arguments of the assessee's counsel. If the depreciation on assets is considered as part of operating profit margin arising from the transaction, and the income from which it is offered to tax, no addition u/s 28(iv) of the Act is warranted, which is already subject to tax pursuant to APA and no further addition is necessary, otherwise it amounts to do....