TaxTMI 
TaxTMI 
2025 (12) TMI 1343
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....ter referred to as 'the Act') dated 26.05.2023, for Assessment Year 2020-21. 2. Shri Vishal Kalra, appearing on behalf of the assessee submits that the only ground of appeal he is pressing before the Tribunal for adjudication is ground no. 4 i.e. assailing findings of the Assessing Officer (AO) and Dispute Resolution Panel (DRP) in treating the reimbursement of actual cost towards seconded employees as Fee for Technical Services (FTS) u/s. 9(1)(vii) of the Act and Article 12(4) of India-Japan DTAA. He submitted that during the period relevant to assessment year under appeal, the assessee had received reimbursements to the tune of Rs. 10,61,81,658/- on account of salaries paid to the employees of Indian entities i.e. Toshiba J.S.W Powe....
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....nt from Indian entities represent reimbursement of actual costs without any element of profit and accordingly, not chargeable to tax in India." 5. During the period relevant to assessment year under appeal, the assessee has received reimbursements from its group entities in India amounting to Rs. 10,61,81,658/- in respect of salaries paid to 22 seconded employees. We find that the issue in the instant appeal is identical to the one considered by the Coordinate Bench of the Tribunal in the case of assessee's group company Toshiba Corporation vs. DCIT (supra). In the instant case, the contracts entered into between the seconded employees and the Indian entities are similar to the contracts in the case of Toshiba Corporation vs. DCIT (supra....
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....ployees is subject to TDS provisions. Thus, the tax has been deducted on the payment of salary to the seconded employees by the Indian companies. 9. The Hon'ble Delhi High Court in the case of PCIT vs. Boeing India (P.) Ltd. (supra) has held that where the reimbursements are in the nature of salary the same could not be treated as FTS. The Hon'ble High Court placed reliance on the decision rendered in the case of CIT vs. Karl Storz Endoscopy India (P) Ltd in IT Appeal No.13 of 2008 decided on 13-9-2010 wherein after analysing facts of the case the Hon'ble High Court held: "10. The foreign company had deputed one of its employees to look after the affairs of the Indian Company. The salary payable to this employee wa....
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.... be treated as fees for technical services. Moreover, since it is paid as salary to Mr. Laser, tax has been deducted under section 192 of the Act." 10. If we look at the India - Japan DTAA similar provisions are contained in Article 12 that deals with Royalty and FTS. FTS is defined in Article 12(4). The same reads as under: "(4) The term 'fees for technical services' as used in this article means payments of any amount to any person other than payments to an employee of a person making payments and to any individual for independent personal services referred in Article 14" Once it is established that the payments are made as salary to the employees for the services rendered in India, such payments are out....
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....held the demand for service tax holding that in a secondment arrangement, a secondee would continue to be employed by the original employer. (ix) The Apex Court in the particular facts of the case had held that the Overseas Co., had a pool of highly skilled employees and having regard to their expertise were seconded to the assessee and upon cessation of the term of secondment would return to their overseas employees, while returning such finding on facts, the assessee was held liable to pay service tax for the period as mentioned in the show cause notice. (x) It needs to be noted that the judgment rendered was in the context of service tax and the only question for determination was as to whether supply of manpower was co....