Case Law Details
American Express (I) P. Ltd. Vs DCIT (ITAT Delhi)
The issue under consideration is whether disallowance of relocation expenses u/s 40(a)(i) of the Act and non granting of tax deducted at source with respect to that expense is justified in law?
In the present case, the Assessing Officer and DRP observed that the assessee had made payments in respect of certain amounts, such as relocation expenses. The Assessing Officer/DRP were of the view that such payments required TDS in terms of section 195 of the Act. Details of such payments relate to relocation charges which were treated as FTS/royalty as per the India USA DTAA. The Assessing Officer/DRP were of the strong belief that reimbursement of relocation expenses for seconded employees is a part and parcel of same secondment agreement and terms and salary and service agreements are in the nature of FTS and are charged to tax, both u/s 9(1)(vii) and under Article 12(4) of India USA DTAA, thus liable to TDS which has not been done by the assessee. Accordingly, addition of was made.
ITAT states that, it is true that most of the relocation expenses are in respect of salary paid to employees of the assessee who travelled abroad for business of the appellant. However, in our considered opinion, these details need verification. ITAT, accordingly, restore this issue to the file of the Assessing Officer. The Assessing Officer is directed to very details and examine whether the payments have been made by the assessee to its own employees who travelled abroad and decide the issue afresh after giving reasonable opportunity of being heard to the assessee. In so far as the issue relating to grant of TDS is concerned, they direct the Assessing Officer to give credit of TDS as per provisions of law. In the result, the appeal of the assessee is allowed for statistical purposes.
FULL TEXT OF THE ITAT JUDGEMENT
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