Secondment Reimbursement Not Fee for Technical Services

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that reimbursement of salary costs relating to seconded employees by an Indian group entity to its Japanese parent company cannot be characterised as Fees for Technical Services (FTS) where the secondees work exclusively under the control, supervision, and employment of the Indian entity. 

The Tribunal found that the payments represented pure cost-to-cost reimbursement of salary expenses without any markup and constituted employment-related payments rather than consideration for technical services. Consequently, the additions made by the Assessing Officer treating such reimbursements as FTS were deleted.