AMD RESEARCH & DEVELOPMENT CENTER INDIA PRIVATE LIMITED Vs. DY. COMMISSIONER OF INCOME-TAX
INCOME TAX APPELLATE TRIBUNAL
Amd Research And Development Center India Private Limited
Dy. Commissioner Of Income -Tax
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P.M.Jagtap, Member (A) -
(1.) THESE four appeals filed by the assessee are directed against a common order of the learned Commissioner of Income -tax(Appeals) V, Hyderabad dated 31.1.2014, whereby he disposed off the appeals filed by the assessee against a common order of the Asst. Commissioner of Income -tax (International Taxation) -I, Hyderabad (Assessing Officer), dated 28.1.2013 passed under S. 201(1)/S. 201(1A) of the Act, treating the assessee as in default for non -deduction of tax at source for the assessment years 2007 -08 to 2010 -11.
(2.) THE assessee in the present case is a company, which was a subsidiary of ATI Technologies, Canada during the years under consideration. It is basically set up as a R & D and Design Centre for providing captive services to its parent company in Canada. The services rendered by it mainly include development of software and hardware solutions in support of handheld and digital TV products, graphics and CPU and testing and validation of developed software and hardware and assistance in designs, development and support for the software and hardware solutions. During the years under consideration, the assessee had made the following payments to its parent company, ATI Technologies, Canada on account of software expenses and engineering expenses -
Since no tax at source was deducted by the assessee from the above remittances made to its parent company abroad, as required by the provisions of S. 195 of the Income Tax Act, 1961, the assessee was called upon by the Assessing Officer to explain why it should not be treated as an assessee in default for its failure to do so.
In reply, it was submitted by the assessee that the amount on account of engineering expenses was paid by it to ATI Technologies, Canada for the engineering services, which were actually received from M/s. Soctronics India Private Limited, Hyderabad. It was contended that payment for the said services availed by the assessee was initially made by ATI Technologies, Canada to Soctronics India Private Limited and the same was subsequently reimbursed by the assessee company to ATI Technologies, Canada. It was contended that the payment made by the assessee company to ATI Technologies, Canada towards engineering services thus was nothing but reimbursement of expenses incurred by ATI Technologies, Canada on behalf of the assessee company and there being no element of profit involved in the said payment, there was no requirement of deduction of tax at source.
(3.) THE above contention of the assessee was not found acceptable by the Assessing Officer in the absence of any agreement between the assessee and the ATI Technologies, Canada or between the assessee and Soctronics India Private Limited produced for his verification. The only evidence produced by the assessee in the form of invoices raised by its parent company ATI Technologies, Canada was not found to be sufficient by the Assessing Officer to support the claim of the assessee. He also recorded the statement of the Chartered Accountant who had issued certificates in Form Nos. 15CA/15CB for 'No TDS' from the remittances of reimbursement by the assessee to ATI Technologies, Canada and inferred from the said statement that the certificates were issued by the said Chartered Accountant on the basis of oral explanation given by the officers of the assessee company without any specific analysis or verification. He also recorded the statements of the directors of Soctronics Technologies P. Ltd. and inferred from the said statements that the said company was actually working for the ATI Technologies, Canada as an independent service provider. He also inferred that all the technical deliverables/outputs/services provided by Soctronics India Private Limited were 'made available' in the repository of the recipient, ATI Technologies, Canada to enable them to use the same on their own. He therefore, held that the claim of the assessee of having remitted the amount on account of engineering expenses to ATI Technologies, Canada as reimbursement of expenses actually incurred by the assessee company on its behalf was untenable. He also noted that the so -called reimbursement had actually happened at a much later point in time than the corresponding dates of the invoices of rendering of services by Soctronics India Private Limited. He further noted that the assessee did not have separate account head for reimbursement to its parent company and all these reimbursement expenses were claimed under various heads of expenses like 'consultancy and contractual charges' or 'deliverable/consultancy service', 'software licence/IT services coupons', 'administrative expenses' etc. across the various years. The Assessing Officer also found from the information provided by the Directors of Soctronics India Private Limited that the payments received by the said concern from ATI Technologies, Canada were recorded as export sales during the years under consideration.;
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