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TMI Blog2022 (9) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... ended warranties are in the nature of security and assurance to customers against any kind of defect/repair after lapse of original warranty and purely optional in nature. Material on record reveal, while entering into contracts for extended warranty, though, the assessee purchases such warranty from CCPL at a particular price, however, it independently negotiates price with the customers. Commissioner (Appeals) has referred to specific instances of invoices raised by the assessee to indicate that the price at which the extended warranty is sold to the customers is different from the warranty claimed to CCPL - there is no compulsion on the assessee to buy extended warranty only from CCPL or any other Bentley recommended party. Technicall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of disallowance of extended warranted expenses paid by the assessee without deducting TDS u/s 195 of the I.T. Act, 1961. 3. Briefly, the facts are, the assessee is a resident corporate entity. As stated by the assessing officer, assessee is an exclusive dealer of Bentley Cars in India. For the assessment year under dispute, assessee filed its return of income on 29.09.2016 declaring income of Rs.13,21,71,320. Assessee s case was selected for complete scrutiny, basically, for examining foreign remittances by the assessee. 4. In course of assessment proceedings, the assessing officer called for the details of foreign remittances made during the year. After examining the details, he found that in addition to the payment made against pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices. He further observed that assessee merely acts as a conduit and secures orders of extended warranty on behalf of CCPL and assessee s activities are wholly dependant on the non-resident entity. Therefore, he concluded that the assessee is a dependent agent of CCPL, in so far as, it relates to extended warranty contract. Thus, he held that the amount remitted to the CCPL towards extended warranty is taxable in India through the PE and the assessee having failed to deduct tax under Section 195 of the Act, he disallowed the amount of Rs.3,75,68,310. The assessee contested the aforesaid disallowance before learned Commissioner (Appeals). 5. Being convinced with the submission of the assessee, learned Commissioner (Appeals) held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident that the extended warranty is an additional feature provided to the customers at their option. There is no compulsion on the customers to buy extended warranty. If some customers agree for extended warranty, the assessee purchases such warranty from CCPL, a Bentley recommended company, the consideration received from the customers towards the extended warranty is remitted to CCPL after retaining a part of it. It is observed, the extended warranties are in the nature of security and assurance to customers against any kind of defect/repair after lapse of original warranty and purely optional in nature. Material on record reveal, while entering into contracts for extended warranty, though, the assessee purchases such warranty from CCPL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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