DCIT v. Pfizer Products (India) (P) Ltd. [ITA No.
2586/Mum/2019, dt. 11-2-2021] : 2021 TaxPub(DT) 882 (Mum-Trib)
Domestic cost sharing agreement whether hit by assessing
officer 40(a)(ia) -- Is it a reimbursement not warranting TDS
Facts:
Assessee had paid certain group employee and certain common
costs to its parent Pfizer Ltd. under a cost sharing agreement. It was the case
of the assessing officer that no TDS was done on the same and thus the same
deserves disallowance under section 40(a)(ia). On appeal Commissioner (Appeals)
reversed the order of the assessing officer applying assessee's own decision of
earlier years. On further appeal by revenue --
Held in favour of the assessee that the cost sharing
reimbursements do not warrant TDS under section 40(a)(ia) as these are
manifested to be reimbursements on actual cost to cost basis. Besides this
second proviso to section 40(a)(ia) is to be read retrospective in nature which
has been manifested in this case.
Applied: Assessee's
own case of earlier years.
Editorial Note: This
is a case of cost sharing arrangement done in the domestic arena. The same
topic on cross border taxation in transfer pricing and in cross border TDS is
wrought with enough controversies even if these are claimed to be on cost to
cost basis.