Kelly Services India Pvt. Ltd., a prominent staffing agency, faced a significant tax assessment dispute for the Assessment Year 2015-16. The case, filed under ITA No.556/Del/2019, was initially against the adjustments made by the Addl. CIT, Special Range-5, New Delhi. The dispute involved erroneous disallowances including charges paid to its US counterpart and Intercompany Divisional Charges to Kelly Services Pte. Ltd., Singapore, which were not considered under relevant Double Taxation Avoidance Agreements (DTAAs).
The primary issue revolved around payments termed as Fees for Included Services (FIS) and Fees for Technical Services (FTS) which, according to Kelly Services, did not ‘make available’ any technical knowledge or skills that would warrant tax under the India-US and India-Singapore DTAAs. Furthermore, the case also involved disputes over stale cheques valued at Rs. 16,23,827, which were not presented for payment and were inappropriately addressed under Section 41(1) of the Income Tax Act.
Despite initial contestations, the matter was resolved amicably under the Vivad Se Vishwas Scheme (VSV), 2020, which aims to mitigate litigation. The formal resolution was confirmed with the submission of Form No.5, leading to a withdrawal of the appeal. This case highlights the complexities of international taxation and the effective use of dispute resolution mechanisms to settle protracted tax disputes.
Kelly Services India Pvt. Ltd. Contests Tax Assessment Dispute for AY 2015-16
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