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Showing contexts for: FTS in Acit Cir 11(3)(1), Mumbai vs Total Oil India P. Ltd, Mumbai on 10 January, 2020Matching Fragments
456) (SC)] and Transmission Corporation (supra). On the other hand, the AO has held the amount to be in the nature of FTS and hence liable to tax in India u/s 9(I) (vii) of the Act mandating deduction of tax from this amount u/s 195. The first issue which arises for determination is whether the amount can be treated as pure re-imbursement or FTS.
8.2.1 The appellant has reimbursed demurrage charges to TOTSA Total Oil ('TOTSA'). Such charge were payable by the appellant to the ship owners and/ or port authorities on account of delay in discharge of cargo However, as a matter of convenience, the payment was made by TOTSA and recharged from the appellant. This is a back to back payment without rendering technical. managerial or consultancy service. It is seen that the Assessing Officer, I any description of service rendered (if an)), held the payment to be in the nature of FTS. As there is no service rendered, there is no question of branding the payment as FTS. The action of the AO is not found to be correct.
"3. Whether in law and on the facts and in the circumstances of the case, the Ld. CIT(A) erred in ignoring the pertinent fact that that by sending their employees to India, the AEs are actually rendering services to the assessee company in India and accordingly, the payments made by the assessee company are in the nature of Fees for Technical Services (FTS). The assessee company was under the obligation to deduct tax at source on the payments stated to be in the nature of reimbursements of salaries and other related charges as per the provisions of Section 195 of the Act read with the provisions ITA Nos. 1877, 1878 2127 & 2128/MUM/2018 M/s. Total Oil India Pvt. Ltd., of Sections 9(l)(vii) of the Act, before making such payments which it has failed to do so.
"4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the decision of the Hon'ble ARR in the case of Verizon Data Services India P. Ltd. (ARR No. 856/2010) and AT & S India P. Ltd. (2006) 287 ITR 421 wherein it was held that the reimbursement is in nature of FTS and the fact that taxes are paid under the head 'Salaries' is of no consequence.
5. The appellant prays that the order of the Ld.CIT(A) on the above grounds be set-aside and that of the A.O be restored."
192. Re AO has claimed that this is a case of dual employment where the appellant is the economic employer and the AEs are legal employer. By sending their employees to India, the AEs arc actually rendering services to the assessee company in India and accordingly, the payments made by the assessee company are in the nature of Fee for Technical Service (FTS). Accordingly, the AO has concluded that TUS ought to have been deducted u/s 195 by the appellant.
9.2 The AO has relied on the decision of AAR in the case of Verizon Data Services India Pvt I.td (AAR No. 865 of 2010), Centrica Offshore Pvt Ltd (AAR No. 856 of 2010) and AT&S India Pvt Ltd [2006) 287 ITR 421 wherein it has been held that reimbursement is in the nature of FTS and the fact that taxes are paid under head 'Salaries' is of no consequence.