Secondment reimbursement not treated as Fees for Technical Services where expatriates worked under the Indian entity's control.

Reimbursement of salary cost for seconded expatriate personnel was not chargeable as Fees for Technical Services where the expatriates worked under the Indian entity's control and supervision, tax had been deducted on the salary payments, and the cross-charge reflected only employee cost without an independent managerial, technical or consultancy service element. The Tribunal followed its earlier year's factual finding on the same arrangement, and the revenue's substance-over-form argument did not alter that position. The addition was deleted in favour of the assessee.

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Issues: Whether reimbursement of employee cost arising from secondment of expatriate personnel was taxable as Fees for Technical Services.

Analysis: The dispute turned on whether the amounts cross-charged by the assessee represented consideration for managerial, technical or consultancy services, or were only reimbursement of salary cost in respect of seconded employees. The record showed no material difference from the assessee's earlier year, and the Tribunal followed its prior finding that the expatriates worked under the control and supervision of the Indian entity, that tax had been deducted on the salary payments, and that the amounts were merely reimbursed employee costs without any independent service element. The revenue's reliance on substance over form did not displace the factual position already accepted in the earlier year.

Conclusion: The reimbursement was not chargeable as Fees for Technical Services and the addition was deleted in favour of the assessee.

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