2004 (1) TMI 16

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....bunal, the Income-tax Department after a lapse of six years issued notices requiring the assessee to show cause why the remittances made by it to Hewlett Packard (USA) in respect of salaries paid by HP (USA), on behalf of the assessee to four "foreign technicians"/expatriates, be not treated as "fee for technical services" and why the assessee should not be treated as an assessee-in-default for no....

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....e assessee is not only liable to pay the salary but to pay the tax thereon. The Tribunal expressed the opinion on the facts that the payment has rightly been treated as salary borne by the assessee on which tax had been correctly deducted at source under section 192 of the Income-tax Act, 1961. Reliance is also placed on the letter of the Central Board of Direct Taxes and a letter addressed by the....

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....ssessee. The Kerala High Court decision considered the ambit of the expression "fees for technical services" under the Explanation to section 9(1)(vii) of the said Act. That provision itself makes it clear that salaries would not fall within the expression "fees for technical services". Moreover, the said decision was delivered on its peculiar facts. In fact, in the said decision it is observed th....