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TMI Blog2012 (2) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... s - Held that:- During the period of this agreement, for administrative convenience, the Home Company shall make payment of salary, bonus and all other benefits to the Employee as per the terms with the Employee on behalf of the Host Company. Host Company shall promptly reimburse Home Company for any and all costs in borne on its behalf in accordance with sec.3. Costs of Host Company. Unless agreed upon otherwise in writing between the parties. Host Company shall bear and directly pay all the related local costs and expenses. Such costs may include, but shall not limited to, housing, rent, utilities, furniture, company car or other transportation and any other foreign service allowances. As can be seen from the above clauses, the facts of the case before us are exactly the same. In view of the same, we do not see any reason to take any other view. In view of the same, assessee’s appeal is allowed. - I.T.A. No. 606- 607(Bang.)/2010 & 149(Bang.)/2010 - - - Dated:- 29-2-2012 - SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER For the Petitioner ; Shri. K.R.Sekhar, CA For the Respondent ; Shri Etwa Munda, CIT-II ORDER PER SMT. P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company herein is supposed to bear only the local costs and expenses. He also observed that the assessee has no powers to terminate the employee or to extend the period of employment and therefore, the assessee company cannot claim that the employee is working under its direct control and supervision. According to him, since the assessee company has no powers to decide the salary or to terminate the employment of the deputed employee, there exists no employee and employer relationship between the Indian company and Mr.Ed Melicor Further, the ITO also observed that Mr. Ed Melicor has to impart his skills and experience as mining Manager to increase the sale of machines and parts, together with engine product support through dealerships within a defined district and Managing dealership administration which are fairly in the nature of managerial as well as technical services, as provided in Explanation-2 to Sec.91(vii) of the IT Act. He has also held that the services rendered by Mr. Stephen James Mcavoy also makes available the skill, experience, technical know how etc. to the assessee company. Thus, he held that that the nature of services rendered by Mr. Ed Melicor are technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also been decided by the Hon ble Delhi High Court in the case of HCL Infosystems Ltd., Vs CIT reported in 274 ITR 261(Del.) 5. The learned DR on the other hand, placed reliance upon the order of the CIT(A) and submitted that there was no employer/employee relationship between the assessee and the employee and that the employee Mr. Ed Melicor being the employee of M/s CAPL has rendered technical services to the assessee company and therefore, the fees for technical services attracts the provisions of Sec.195 of the IT Act. 5.1 Having heard both the parties and having considered the rival contentions, we find that the facts of the case before us are exactly similar to the facts of the case before the A Bench of this Tribunal in the case of M/s IDS Software Solutions (Ind.) Pvt.Ltd., (cited supra) wherein the Tribunal after considering the issue at length has held in para 11-17 of its order as under; 11 The secondment agreement, as we have already held, constitutes an independent contract of service in respect of the employment of Dr.Sundarrajan with the assessee company. It may be true that IDS, the US company is the employer of Dr.Sundarrajan in a legal sense but since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have already done. Thus, reading the Articles of Association as well as the second agreement together, it seems to us that Dr.Sundarrajan was an employee of the assessee company, subject to the supervision and control of its Board of Directors, in addition to being the Managing Director of the assessee company. 12. For the above reasons, we hold that Dr.Sundarrajan was an employee of the assessee company during the relevant time and the amount payable to him was not to suffer tax deducted at source at the time of remittance to IDS since the tax has been deducted and paid to the Indian Income-tax authorities. 13. The next question is whether the amount can be considered as fees for technical services within the meaning of Explanation-2 below Sec.9(1)(vii) of the IT Act. Under this Explanation fees for technical services means any consideration including lumpsum consideration for the rendering of any managerial, technical or consultancy services, including the provision of services of technical or other personnel, but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical services. 14. The department has drawn our attention to the ruling of the Authority for Advance Rulings in the case of AT S India Pvt.Ltd.,(2006) 287 ITR 21. In his case the agreement entered into by the Indian company with its Austrian parent company was titled Foreign Collaboration Agreement . Article 4 of the agreement obliged the Austrian company to provide all assistance and cooperation to the India company in its venture by providing appropriate support technology. Article 4.2 required the Austrian company to offer the services of its technical experts to the assessee for working on the project that was being executed. There was another agreement called the secondment agreement between the India and Austrian companies and it inter-alia provided that the Austrian company can at any time remove the seconded person and replace him with similarly qualified persons. Referring to the secondment agreement, the AAR observed that a plain reading of the above clause would show that the Austrian company retained the right over the seconded personnel and had the power to remove any seconded personnel from the assessee company which has control and supervision of the work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee) on a full-time basis to Host Company to perform for Host Company the services set forth in Exhibit-B and hereby made a part hereof, as mentioned from time to time by the written agreement of the parties (services). During the term of this Agreement and for four years thereafter, Host Company shall not solicit the employment or other retention of the Employee without the prior written consent of Home Company. Unless otherwise agreed to in writing between the parties, the Employee shall perform the services at Host Company s premises and devote all of his/her working time and energy to Host Company. Host company shall take all reasonable actions necessary to ensure that the Employee is in compliance with all applicable local laws, regulations or other requirements applicable to immigration and the services. The Employee will report to, and be under the direction and control of, Host Company and comply with Host Company s policies and procedures applicable to the services, including without limitation, reasonable directives of Host Company concerning job safety and confidentiality in the handling of data and information. Home Company represents that, to the best of its kn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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