Salary reimbursement to deputed staff was not fees for technical services, so no tax deduction under section 194J was required.

Reimbursement of actual salaries paid to employees deputed from group hotels was held not to fall within fees for professional or technical services under section 194J, because the deputed personnel were acting as employees and not rendering independent consultancy or professional services. The agreement separately distinguished technical consultancy fees from expense reimbursement, confirming that the salary payments were distinct from service consideration. As the amounts represented salary income already chargeable under the head "salaries", no further tax deduction obligation arose on the assessee for the reimbursed sums. The consequential demand under section 201 and interest under section 201(1A) were therefore unsustainable.

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Issues: Whether reimbursement of salaries paid to deputed staff of group hotels was liable to tax deduction at source as fees for professional or technical services under section 194J, and whether interest under section 201(1A) could be levied for non-deduction.

Analysis: The payment in question was found to be reimbursement of actual salaries of employees deputed from the group hotels. The deputed personnel were not carrying on an independent profession and were not rendering fees-based professional services to the assessee; they were performing duties as employees under their own employers. The amount reimbursed was salary and not consideration for technical consultancy. The definition of fees for technical services also excludes consideration that is income chargeable under the head salaries. The agreement separately provided for technical consultancy fees and for reimbursement of expenses, showing that the salary reimbursements were distinct from service fees. Since the deputed employees had already been taxed on their salary income, no further demand could be sustained against the assessee on the same payment.

Conclusion: The assessee was not liable to deduct tax at source under section 194J on the reimbursement of salaries, and the demand under section 201 and the interest under section 201(1A) were unsustainable.

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