Secondment reimbursement not treated as technical services; no additional withholding tax under section 195 on salary cost recovery.

Reimbursement of salary costs to an overseas group entity under a secondment arrangement was treated as a cost-to-cost recovery, not consideration for technical, managerial or consultancy services. Because tax had already been deducted on the salary component under section 192 and the payment to the foreign entity was only a reimbursement, no additional withholding tax was required under section 195. The consequential liability under section 201 therefore did not survive. The analysis relied on earlier orders in the assessee's own case and binding jurisdictional decisions.

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Issues: Whether reimbursement of salary costs paid to the overseas group entity for seconded employees was chargeable as fees for technical services or fees for included services so as to require deduction of tax at source under section 195 of the Income-tax Act, 1961 and attract consequential liability under section 201.

Analysis: The appeal concerned payments made under a secondment arrangement. The controversy turned on whether the overseas entity merely recovered salary costs or whether it rendered technical, managerial or consultancy services through the seconded personnel. The earlier orders in the assessee's own case and the binding jurisdictional decisions were followed. On the facts accepted by the appellate authority, tax had already been deducted on the salary component under section 192, and the payment to the overseas entity was treated as reimbursement of salary costs on a cost-to-cost basis rather than a separate taxable service payment. The Tribunal accepted the view that, in these circumstances, the payment did not warrant additional deduction under section 195 and the consequential demand under section 201 could not survive.

Conclusion: The reimbursement to the overseas entity was not held taxable as fees for technical services or fees for included services, and no further tax deduction at source under section 195 was required; the assessee's appeal before the Revenue authorities succeeded.

Ratio Decidendi: Where salary paid to seconded employees is already subjected to deduction under section 192 and the payment to the overseas entity is only a reimbursement of salary costs on a cost-to-cost basis, the amount is not liable to additional TDS under section 195 as fees for technical services or included services.

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