TaxTMI 
TaxTMI 
2026 (6) TMI 876
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....IT appeal. 3. The briefly stated facts of the case are that that the assessee company is engaged in the business of administrative support, document processing, account maintenance, billing and transaction support services to examine group of companies. It filed its return of income on 29.11.2016 at a total income of Rs. 69,071,470 which was resigned revised on 19 March 2018 at a total income of Rs. 54,743,010. Subsequently the return of income was picked up for scrutiny by issuing a notice under section 143 (2) of the Act. During the course of the assessment proceedings the ld. AO noted that assessee has got the reimbursement of salaries and allowances amounting to Rs. 147,133,002 made to ExxonMobil Asia-Pacific Pvt. Ltd. without deduction of tax at source. Therefore the assessee was asked why the taxes were not required to be deducted under section 195 of the Act and therefore it should be disallowed under section 40 (a) (i) of the Act in case of the assessee. 4. The assessee submitted that the above sum is paid as secondment/assignment of the employees and therefore no taxes are required to be deducted at source on the above sum being cost to cost reimbursement to the grou....
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....ded to the Indian company are fees for technical services and therefore the tax should have been deducted. Accordingly the total income of the assessee was assessed at Rs. 201,876,012/- against the returned income of Rs. 54,743,010 by assessment order dated 12 December 2019. 6. The assessee carried the matter in appeal before the learned CIT - A wherein the appeal filed by the assessee was dismissed. The learned CIT - A held that undisputed fact shows that the employees were on the rolls of assessee and secondment agreement clearly established that they continue to draw a salary and employment benefits from the assessee. Responsibility for their employment including Social Security and retirement benefits also rested with the assessee. Although the assessee may have had operational control over their day-to-day activities such control alone is not determinative of the employment relationship. Therefore it was the case of the learned CIT - A that these employees belonged to the group companies and not to the assessee and therefore the payment made by the assessee to them is a services rendered by these seconded employees is clearly in the nature of managerial and consultancy serv....
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....ts and submitted that issue is covered in favour of the assessee by the Decision of honourable Karnataka high court in case DCIT V Abbey BusinessServices Private Limited. He relied upon following judicial decisions i. PCIT V Boeing India(P) Limited 158 taxmann.com 214 (SC) ii. PCIT V Boeing India(P) Limited 158 taxmann.com 131(del) iii. Flipkart internet P Ltd V DCIT 139 taxmann.com 595 (kar) iv. DCIT V Abbey Business services India P Ltd 122 taxmann.com 174 (kar) v. DCIT V Total energies marketing India P Ltd ITA no 97/M/2023 vi. Goldman sachs services P Ltd V DCIT 138 taxmann.com 162(bang) vii. TE Connectivity services P Ltd V DCIT 177 taxmann.com 792(bang) viii. Ernst & Young LLP VACIT 175taxmann.com 150 (Del) ix. Serco india P Ltd V DCIT ITA no 1432 / del/2016 8. The Ld DR vehemently supported the orders of the ld Lower authorities. He submitted that issue is squarely covered against the assessee by the decision of the honourable Delhi High Court in case of Centrica India offshore private limited versus CIT (364 ITR 336). 9. We have carefully considered the rival contentions and perused the o....
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....the work, the power to impose work-related corrective measures, and the determination of holidays and work schedules. However, these factors primarily assess the employer's degree of control over the employee and the organization, and do not fully account for the evolving nature of employer-employee relationships. 12. The Hon'ble Supreme Court considered this issue in C.C., C.E. & S.T., Bangalore v. Northern Operating Systems (P.) Ltd., [2022] 138 taxmann.com 359 (SC)/ [2022] 61 GSTL 129 (SC)/[2022] 92 GST 792 (SC), dated 19.05.2022. In that case, Northern Operating Systems (P.) Ltd. ("NOS"), an Indian entity forming part of a multinational group, entered into secondment agreements with group companies located in the USA, UK, Ireland and Singapore. The expatriate employees remained on the payroll of the foreign entities for continuity of social security and retirement benefits, though NOS claimed to be their employer for all practical purposes. During the secondment period, NOS issued employment letters setting out the terms of employment. The employees received salary, bonus, social benefits, out-of-pocket expenses and other payments from the foreign entities, which NOS reimbur....
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....imbursed by the assessee were not liable to tax deduction at source and could not be treated as fees for technical services. The Court further noted that the secondment agreement constituted an independent contract of service in relation to employment with the assessee. On reviewing the key terms of the agreement, it observed that the seconded employees were required to work at such places as directed by the assessee and to function under its control, direction and supervision, in accordance with its policies, rules and guidelines. The Court also distinguished the decision of the Hon'ble Delhi High Court in Centrica on the ground that the issue of permanent establishment did not arise in Abbey Business Services. Thus, the High Court was concerned only with fees for technical services and reached its conclusion after examining the secondment agreement itself. 14. In case of Flipkart Internet private limited versus DCIT the honourable Karnataka High Court in 139 taxmann.com 595 was concerned with the interpretation of the master service agreement dated 28th may 2019 between Walmart incorporation and flipkart Singapore for secondment of employees and provision of services. Based on....