9911796707
TMI Blog2025 (3) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... te the kind of services rendered by the seconded employees were not made available and that they were not requisitioned for the purpose of training the regular employees of the Assessee, is too farfetched to gain acceptance. So is the submission that in the course of training, there would be transmission of technical knowledge, experience, skill, know-how and that would satisfy the requirement of "make available". If that idea was lurking in the mind of the Assessing Officer, he could have called for such information from the sources that be. We have to keep in mind that arrangements of the kind do obtain in a shrunk globe and that all indicia of employer-employee relationship, which ordinarily obtain in the native Service/Industrial Jurisprudence cannot be expected in the realm of international business of the kind. If Triple Test namely (i) Direct Control, (ii) Supervision & (iii) Direction, is satisfied vide ABBEY BUSINESS [2020 (12) TMI 570 - KARNATAKA HIGH COURT] a strong case is made out as to the existence of employer employee relationship, the absence of a few indicia notwithstanding. An argument to the contrary would offend the stark truths of business world. Added, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he services rendered by the seconded employees would fall within the precincts of Section 9 (1) (vii) of the 1961 Act and that the payment made by the Assessee-Company is towards consideration for the technical services rendered by the foreign entity. The said amount being income earned in India was held liable to be taxed and consequently, Assessee-Company's application filed u/s 195 (2) of the Act came to be negatived by the Assessing Officer vide order dated 01.05.2020. This being challenged in the subject WP, the Assessee-Company has earned the impugned order, now put at our hand for examination. 3. Learned Sr. Panel Counsel appearing for the Appellant submits that the rejection of Assessee-Company's application u/s 195 (2) could not have been faltered by the learned Single Judge; the Rulings relied upon by the Assessee-Company before the learned Single Judge were not applicable to his case; the very Form N.15E & Form No. 13 reproduced by the learned Single Judge would demonstrate that application u/s 195 was for determination for appropriate proportion of sum payable to non-resident, chargeable to tax in the case of recipient; it was a plain case of payment made by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement submission of learned Sr. Panel Counsel that there is absolutely no material evidence to demonstrate that their existed a vinculum juris of employer-employee between the Assessee-Company and the seconded employees and therefore, whatever payment made to their employer namely, Walmart Inc., cannot be treated as reimbursement of salary, is bit difficult to countenance and reasons for this are not far to seek. The Assessee - company had entered into a MSA with Walmart Inc., for secondment of employees, in terms of which either of the parties thereto could use the services of seconded employees. Clause (2) of MSA provides that the Company placing the secondees will inter alia invoice the compensation and the wage cost of secondees incurred in the Home Country. Out of the two distinct parts in the MSA, one relates to secondment of employees. Accordingly, the Wallmart Inc., had seconded four employees to the Assessee - Company by virtual of Global Work Assignment with those very employees who would work for the Assessee-Company. Even the appointment letters have been issued to these seconded employees with material particulars of Job Chart & other details such as, contribution to P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a tax resident of USA and therefore, the disputed transaction shall be governed by the provisions of India-US DTAA which has legal cognition u/s 90 (2); Explanation 2 to Section 9 (1) (vii) of the 1961 Act is not attracted. Learned Sr. Advocate Mr. Gulati appearing for the Assessee is right in contending that in terms of Article 12 of India-US DTAA, only those payments which are made for (a) rendering technical or consultancy services and (b) making the technical knowledge, experience, skill, know-how etc., available to the recipient, are covered within the meaning of FIS. An income can be charged to tax as FIS only if it is a service of technical or managerial nature and the service provider makes the services available to the Recipient. The expression 'make available' as employed in DTAA has been construed in a particular way. In CIT v. DE BEERS INDIA PVT. LTD. (2012) 346 ITR 467 (Kar), a Coordinate Bench has held that a technology will be considered to be "made available" only when the person requiring the service is enabled to apply for the same on his own resulting in some enduring benefit and that mere existence of the provision of the service by technical expert, would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinue their services with Walmart in US after the termination of their secondment in India; c. the seconded employees do not report to Walmart Inc. for their work but undertake the work on behalf of the Respondent and are answerable to the employees of the Respondent who supervise and instruct them on the work performed during the secondment period; d. the Respondent has the authority to take disciplinary actions against the seconded employees; e. the seconded employees have the right to legal recourse against the Respondent in relation to payment of their salaries, terms of employment, etc., during the secondment period; f. the seconded employees are also subject to the same working rules, labour regulations and other internal policies of the responsible as is applicable to the domestic employees; g. the seconded employees will also be subject to deduction under Section 192 of the Act and provident fund on the salaries and benefits of such seconded employees are paid by the Respondent." 5.7 We have to keep in mind that arrangements of the kind do obtain in a shrunk globe and that all indicia of employer-employee relationship, which ordinarily obtain in the nativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
