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TMI Blog2024 (9) TMI 1624X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational assignees (secondment employees). Similarly other clauses of the agreement would show that the international assignees would have lien to their jobs in the parent company after the termination of the secondment employment agreement. All these clauses are required to be investigated by the AO to find out the true nature of the payments made to the secondment employee. We remit the entire issue to the file of AO for denovo examination considering additional evidences filed by the assessee before us. We also direct the AO to consider the alternative plea of the assessee. Disallowance of technology fees paid by the assessee to the parent company - As assessee could not be able to establish with cogent material that the AE had actually rendered services to the assessee and assessee has also failed to derive any benefits from these payments - So far as the benefits factor is concerned, the courts have time and again held that the TPO/DRP/A.O cannot disallow the genuine expenses on the ground that no benefits have been received by an assessee. A reference can be made to the judgment of case of Ekal Application [ 2012 (4) TMI 346 - DELHI HIGH COURT] So far as rendering of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and directed the AO to complete the assessment. 6. Aggrieved with the order of the Assessing Officer the assessee filed the present appeal and has raised as many as twelve grounds of appeal. However, at the time of hearing, the learned counsel for the assessee has only argued Ground No.1 to 3 and Ground Nos. 7,8 and 9. 7. With respect to Ground No.1, the learned counsel for the assessee has mainly contended that during the course of transfer pricing proceedings the Ld. TPO has not made any adjustment qua ground No.2-3. It is submitted by him that the Ld. DRP while hearing the objections of the assessee has observed that the assessee has paid an amount of Rs. 5,26,73,215/- to the secondment employees of the parent companies. The learned DRP further observed that these payments have been made without deducting TDS as per the provisions of section 195 of the Act. Accordingly, the learned DRP has issued a show cause notice, asking for the explanation of the assessee as to why these payments would not attract the provisions of section 40(a)(i) in as much as the assessee has not deducted the TDS in terms of provisions of section 195. In response to the show cause notice, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 98.99 lakhs incurred by the assessee towards technology licensing fees. Learned counsel for the assessee pointed out that the assessee has incurred this expenditure on account of royalty paid to it s parent company for exploiting the technology license granted by the parent company to the assessee. However, the TPO has disallowed this expense on the ground that the assessee failed to establish the benefits derived by the assessee by incurring these expenses. Before the learned DRP, the assessee has filed certain additional evidences as mentioned hereunder: ▪ Memorandum about the provision of technical documents to (TTDI) ▪ Memorandum about provision of end-user license of technical calculation software license to (TTDI) ▪ Email communication pertaining to training of employees in Japan ▪ Photographs of employees ▪ Invitation letters and visa applications of Toshiba India s employees for travelling to Japan to participate in technical meetings ▪ Sample email correspondence between Toshiba India and Toshiba Japan in Japanese language with English translation. 12. Additional evidences filed by assessee were forwarded to the TPO for his comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer for examining afresh. 14. The learned DR relied upon the orders of the lower authorities below. 15. We have heard the rival submissions and perused the orders of authorities below, we observe that the first issue which require adjudication is that as to whether the assessee has made payments in the nature of FTS or salaries to the secondment employees. The assessee in order to prove his case has filed the appointment letters issued to the secondment employees. Perusal of these letters issued by the assessee company to the secondment employees, (paper book pages 205 to 206, 207, 208 and pages 340 to 344), would show that the designation given to these employees have been verified as Director, Chief Adm. Officer, General Manager of Switchgear production division, etc. However, only on the basis of mere designation it cannot be assumed that the payments made to them were in the nature of FTS. The assessee has also filed Form 16A to establish that the assessee had duly deducted TDS on the amount credited to the employees accounts. The assessee has also drawn the attention of the bench towards the agreement entered into between the assessee and the parent company to contend tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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