Case Law Details
ITO Vs Petroleum India International (ITAT Mumbai)
ITAT Mumbai held that reimbursement of Indian salary and other benefits to the member companies by PII pertaining to all seconded personnel, technical personnel whether posted in India or overseas is not fee for technical services within the ambit of definition of explanation 2 to section 9(1)(vii) of the Act. Hence, TDS not deductible.
Facts- The assessee M/s. Petroleum India International (PII) is an Association Of Persons (AOP) and is assessed as such having main object and activity is to provide technical expertise in the field of oil exploration and refinery. PII has been rendering the aforesaid services by marketing its capabilities through various foreign agents and through direct marketing efforts and when receives enquiries from foreign clients for rendering technical/consultancy services and training it approaches its member companies for locating expert technical personnel who possess specialized knowledge, expertise and experience for the purpose of enquiry raised. For the secondment of such employee by the member/employer company PII is to compensate the member employer company for all expenses incurred by it towards the Indian salary and other benefits of such employees during the period of secondment.
The AO noticed that mostly these payments are made to the secondee who are non-resident and as per section 195 any person responsible for paying to the non-resident other than a company in some chargeable under the provisions of Income Tax Act, 1961.
AO that since the member companies are providing experts to PII for rendering technical services for which assessee is also making payment to member companies on which TDS is deductable under section 194J of the Act but the assessee has failed to deduct any TDS from the above payment.
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