TaxTMI 
TaxTMI 
2025 (2) TMI 153
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....angalore. RBAI is also engaged in the distribution of car multimedia products. RBAI, the Assessee, filed its return of income for A. Y. 2020-21 on 20.01.2021 electronically under section 139 of the Income-tax Act, 1961 vide e-filing declaring total income at Rs. 1,565,455,990/-. The Assessee's income was processed u/s 143(1) of the Act by the CPC. Further, this case was selected for scrutiny through CASS. Accordingly, a notice u/s 143(2) of the Act was issued on 29.06.2021 and was duly served on the Assessee. A reference u/s 92CA (2) of the Act was made to the ACIT. TPI (1)(2), Bangalore, ('Ld. TPO or 'learned TPO') for the computation of arm's length price in relation to the international transactions by the National e-Assessment Centre (NeAC) through ITBA portal. Notice u/s 92CA(2) of the Act was issued on 31.05.2023, along with questionnaire to the Assessee, whereby it was required to submit details/explanations to support arm's length price. In response to the notices issued, the Assessee filed various submissions through ITBA portal, webmail and physically in the Tapal section of the department as well. Further, all the records and explanations called f....
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....9;ble Dispute Resolution Panel ('Hon'ble Panel' or 'Learned Panel' or 'DRP') as per the provisions clause (b) of sub-section (2) of section 144C of the Act. 3. Aggrieved with draft order of AO dated 28.9.2023, the assessee filed its objections before the DRP and contended that the adjustments made by the ld. TPO while conducting the TP study are bad in law. Before ld. DRP, the assessee has basically contended that the adjustments made by the TPO (a) qua the receipts of corporate services from its AE are not genuine and hence, the assessee is not entitled for the payments made to its AE in lieu of the services received. (b) The payments made by the assessee to the secondment employees are not the payments for rendering of services rather payments in the nature of FTS. For the sake of convenience, the observations made by the ld. TPO in para 9.4 are as under; i. The submission made by the Taxpayer is only brief note on services rendered. The Taxpayer has not proved whether such services are rendered. The taxpayer has not provided details of allocation keys for these services except for central procurement services. For these services, the taxoa....
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....e are field claims which are in the nature of warranty cost incurred by the taxpayer company towards third party claims raised through the AE. However, the details of third party for which the Japanese AE has allegedly worked were not provided. vi. The taxpayer has not provided any specific details or supporting documents with regards payment of warranty cost of Rs. 56,29,069. vii. Generally, the companies have their internal control mechanism for releasing payments to vendors who provide services/products. The payments are released only when concerned personnel/engineer working in the concerned department confirms the receipt of certain service/product. This is generally done through an ERP system such as SAP. The purpose is to have internal control and have systematic audit trail. In the instant case, the taxpayer has not provided any such detail or audit trail to prove that services inter alia central procurement services were indeed rendered. Here, there is no proof submitted by the taxpayer whether any employee/engineer travelled to Japan to seek any technical assistance or any engineer/expert from AE company visited the taxpayer company to technically assist....
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....elow regulations for termination of this contract apply. 16.2 Management (Executive) of your HCU reserves the right to call you back to your home country with a three months' notice period. From the above clauses of the contract it is very clear that Home country unit is employer, which holds all basic and Important control over the employee. Even the insurance and other social security services are still maintained in home country. Termination of the employment is also under the parent employment. The seconded employees have also made available the technology and know how out of their experience in the area to the assessee company and thus have enabled the assessee to apply the knowledge so gained themselves. b. The assessee claims to be fulfilling the tax obligation u/s 192 and hence cannot be called upon to pay tax once again u/s 195 of the Act. Here, attention is drawn to two types of payment involved: 1. One is the salary payable by the seconder to the secondees. 2. Second one is the payment made to seconder for the services by the seconder through seconded employees in India. rendered. In the present case the arrangeme....
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....t instead of 192 of the Act. Therefore, the ld. AO made an addition of Rs. 4,45,16,242/- by disallowing the payments made to secondment employees, invoking the provisions of section 40(a)(i) of the Act. 3.4 Before ld. DRP, the ld. Counsel for the assessee made exhaustive submissions, copy of the same are placed in paper book at page 1 to 119. The brief synopsis filed before the ld. DRP explaining the controversy and the issue involved are there at page 120 to 134. 3.5 Ld. DRP after considering the submissions of the assessee concluded that the assessee has failed to establish with documentary evidences as to whether the assessee has received any services from its AE, observing this factual background the DRP affirmed the order of AO. 3.6 In respect of the second issue, the ld. DRP in its order in para 2.5.1 internal page 11 has observed that the assessee has failed to establish as to how it is the solely legal and economic employer of the expatriates arrived at the disposal of assessee from abroad. The ld. DRP, further held that some submissions of copies of letters issued to the expatriates vis-à-vis their employment and submission of copies of Form No.16 does not ....
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....le on record. At the outset, we observe that it is the categorical finding of the DRP/TPO/AO that the assessee has failed to establish the rendition of services by its AE. The ld. Counsel for the assessee in order to refute the observations of the DRP has drawn the attention of the bench towards the documentary evidences filed before the DRP as well as TPO/AO and contended that the assessee has duly discharged rendition of services by its AE. Counsel for the assessee has drawn the attention of bench towards page no.2 of the paper book, wherein a table under the heading "Evidence of Commissioning Services" has been made, which is reproduced hereunder: 5.1 Perusal of the above table would show that these are merely e- mail correspondence between the employees of the assessee as well as the employees of its AE. When the bench has asked about the documentary evidences in respect of the software/other tools received by assessee from its AE, utilized by assessee in its manufacturing unit. The counsel for the assessee contended that assessee will file each and every document before the lower authorities. Therefore, we remit this issue to the file of AO for examining it afresh. So far a....