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TMI Blog2023 (1) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... ignment agreement. We hold that the payment made by the assessee towards reimbursement of expenses is in the nature of salary cost of the assigned employees subject to TDS under section 192 of the Act, hence, cannot be treated as FTS under section 9(1)(vii) of the Act and Article 12 of the tax treaty. Accordingly, there was no obligation on the part of the assessee to withhold tax at source u/s 195 of the Act. We delete the addition made by the AO. This ground is allowed. Delayed payment of employees contribution to Provident Fund (PF) within the due date prescribed under the PF Act held that the assessee has violated the provisions of section 36(1)(va) - HELD THAT:- There is no dispute that the assessee has not paid employees contribution to PF within the time limit prescribed under the PF Act. It is the case of the assessee that the deduction should be allowed as the payment has been made before the due date of filing of return under section 139(1) - In our view, the aforesaid claim of the assessee is not acceptable, as now the issue stands decided against the assessee by the Hon ble Supreme Court in case of Checkmate Services Pvt. Ltd [ 2022 (10) TMI 617 - SUPREME COURT] X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was exercising full supervision and control over those employees and the payments made to them are in the nature of salary. Accordingly, assessee has deducted tax at source under section 192 of the Act. It was submitted that for administrative convenience, salary of the concerned employees were paid by the parent company and the assessee reimbursed the actual salary cost to the parent company without any mark up. In sum and substance, the assessee claimed that it is the real and economic employer of the concerned employees in respect of whom the salary expenditure was claimed. The Assessing Officer, however, was not convinced with the submission of the assessee. He observed, the payment towards salary was not remitted to the overseas bank accounts of the concerned employees. Rather, it was paid to the parent company, in turn, it was paying salary to the employees. He observed, the assessee is providing specialized services to Indian customers, for which, competence and supervision is being provided by the parent company through specialized managerial personnel who have experience in this field. Thus, he ultimately, concluded that the parent company has seconded its employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of three years and one of the persons was holding the position of Managing Director for a period of five years. 7. The terms of the agreement provided that the concerned persons shall, at all times, during the tenure of the agreement be employee of the assessee and the assessee would exercise full rights of an employer over the assigned employees and the parent company would surrender all its rights as an employer over the assigned employees during the tenure of the agreement. The agreement also provides that the assigned persons from time to time would require to perform the duties as per the requirements of the assessee and such persons should be under obligation to report to the management of the assessee. The agreement further provided that during the tenure of the agreement the assigned employees would not be subjected to any sort of control, direction and supervision of the parent company. It also provided that no offer of employment shall be made to the assigned employees by the parent company during the tenure of the agreement without prior consent of the assessee. The agreement also provide that upon expiry or earlier termination of the agreement, it would be open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon by the departmental authorities, in our view, the said decision would not apply due to following factual differences: S. No. Centrica Facts Yamazen India Facts 1. The seconded employees were not specifically taken into employment by the Indian Company. Seconded employees taken into employment by Appellant. 2. The obligation to pay the salary was of Foreign Company. Indian Company was merely reimbursing the salary paid by Foreign Company. Seconded employees had no right against Indian Company in case of failure of payment of salary. Obligation to pay all the costs and benefits is the sole responsibility of Appellant and is clearly spelt out in the assignment agreement. 3. The employment contracts issued by Indian Company to seconded employees were silent on salary details. All compensation and benefits accruing to employees are in accordance with applicable rules of Appellant. 4. The seconded employees were not specifically released by Foreign Company during the period of secondment. Assignment agreement clearly demonst rates that the seconded employees shall work "exclusively" for Appellant in the conduct of its business operations. 5. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP has affirmed the decision of the Ld. AO by holding that the assessee has deducted withholding tax on 21 substantial payments and yet argued that the tax is not deductible u/s 195 of the act and provision of section 40(a)(i) cannot be invoked in the case of said payment. 31. The DRP has affirmed the decision of the AO by holding that the assessee has deducted withholding tax on substantial payments and yet argued that the tax is not deductible u/s 195 of the act and provision of section 40(a)(i) cannot be invoked in the case of said payment. 32. The Special Auditors in their Audit Report have worked out particulars of payments in respect of which no TDS was deducted u/s 40(a)(ia) of the Act. Consequently, an amount of Rs. 54,06,328/- was not to be allowed as expenditure." 33. We have also perused the TDS certificates, Forms 15CA and 15CB, tax deducted by the assessee and all these documents are part of the paper book. There is no dispute that the assessee has deducted tax at source u/s 192 of the Act. On the given facts of the case, we are of the considered opinion that the provisions of Section 195 of the Act do not apply. Considering the facts of the case in totality, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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