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TMI Blog2015 (10) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... al services. - Decided in favour of assessee. Disallowance under section 10A - Held that:- This issue is covered by the decision of the Jurisdictional High Court in the case of Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT ] wherein it was held that if any item is reduced from export turnover, then the same has to be reduced from total turnover also for computation of deduction under section 10A of the Act. Merely because the department has filed an appeal before the Hon’ble Supreme Court, it does not loose its precedential value. As the Ld. CIT(A) has followed the judicial precedent on the issue in giving relief to the assessee, we do not see any reason to interfere with the same.- Decided in favour of assessee. - I.T.(T.P.)A.No.1509/Bang/2012 - - - Dated:- 4-9-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER For The Revenue Mr. P.K. Srihari For The Assessee Mr. Chavali Narayan ORDER PER SMT. P. MADHAVI DEVI, J.M. This appeal filed by the Revenue is directed against the Order of the Ld. CIT(A)-I, Bangalore dated 31.08.2012 for the A.Y. 2008-2009 in granting relief to the assessee by deleting the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt per se do not bear the character of income. The A.O. however, did not agree with the contentions of the assessee and held that the payments made by the assessee to Cerner Corporation, USA, a nonresident, is liable for deduction of tax at source under section 195 of the Act. Further he also held that even otherwise, the payment made was towards fees for technical services and on this count also the payments are liable for TDS. He accordingly disallowed the entire payment made to Cerner Corporation and brought it to tax under section 40(a)(ia) of the I.T. Act. 2.1. Further, on perusal of the P L account of the assessee, the A.O. observed that the assessee has incurred communication expenses of ₹ 1,51,52,880 and travelling expenses of ₹ 3,28,06,568. On perusal of the details of these expenses, he noticed that an amount of ₹ 1,49,65,548 was towards data communication/voice communication expenses and ₹ 83,87,831 was towards travelling expenses incurred in foreign currency and that these expenses have not been reduced from the export turnover for the purpose of computing the deduction under section 10A of the Act. After considering the assessee s contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance upon the order of this Tribunal in assessee s own case for the A.Y. 2006- 2007 even though the same has not been accepted by the department and further appeals have been filed before the Hon ble High Court under section 260A of the Act. As regards the computation of deduction under section 10A of the Act and reduction of communication expenses from both the export turnover as well as the total turnover for such computation, the learned D.R. submitted that the Ld. CIT(A) has followed the decision of the Jurisdictional High Court in the case of Tata Elxsi Limited reported in 247 CTR 334 even though the same has not been accepted by the department and SLP has been filed before the Hon ble Supreme Court. 4. The Ld. Counsel for the assessee, on the other hand, supported the orders of the Ld. CIT(A) and submitted that this issue had arisen in assessee s own case in the earlier A.Y. 2006-2007 wherein the Tribunal had decided both issues in favour of the assessee. A copy of the said order of the Tribunal has been filed before us. 5. Having regard to the rival contentions and the material on record, we find that both the issues against which the Revenue has filed this appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sively for the enterprise in the State of employment and was released for the period in question by the enterprise in his State of residence (BFH 114 (1986) re Germany's DTC with Spain). If this view is applied to the present case, the assessee company can be considered as the economic employer because the services are rendered by Dr. Sundararajan to it, the salary is met or borne by it. Be that as it may, the person who actually controls the services of Dr. Sundararajan is the assessee company. Under the secondment agreement he is to act in accordance with the reasonable requests, instructions and directions of the assessee company. He shall devote the whole of his time, attention and skills to the assessee company. He is reportable and responsible to the assessee company. He can be rejected by the assessee company in which case the US company is bound to replace him. Under clause 86 of the Articles of Association of the assessee company, which we have already noticed, the assessee company may remove Dr. Sundararajan before the expiration of the period of his office. Clause 89 of the articles empowers the Board of Directors of the assessee company to regulate the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring 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 financial or accounting information, price or cost data and any other proprietary or business related information. Article VI which provides for indemnity, that is to say, the liability of the assessee company to indemnify the US company from all claims, demands, etc., consequent to any act or omission by the seconded employee is also inconsistent with the claim of the department that this is an agreement for rendering technical services. The Article further provides that nothing in the agreement shall be construed as a warranty of the' qual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33. This is a clear case of technical consultants visiting India for collecting random samples for the purpose of sending reports from abroad on the basis of the analysis of the samples. The question was whether the fees paid to the non-resident consultant were fees for technical services. There can be no doubt that the services rendered by, the non-resident consultants were technical and consultancy services. In this case there was no secondment agreement. It was a clear and simple case of rendering technical services. This case has nothing in common with the present case. 16. For the above reasons we are also not able to hold that the payment to IDS represented fees for technical services. 6. As the facts and circumstances before us are also similar and the Ld. CIT(A) has followed the order of this Tribunal in the assessee s own case to give relief to the assessee, we see no reason to interfere with the order of the Ld. CIT(A). Ground Nos. 2 and 3 raised by the Revenue are, thus, rejected. 7. As regards ground Nos. 4 to 6, we find that this issue is covered by the decision of the Jurisdictional High Court in the case of Tata Elxsi reported in 247 CTR 334 wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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