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The Tax Publishers 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.

The Tax Publishers

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.