Remand by ITAT to check if salary of Seconded employee was Fee for Technical Services under Indo-Canada DTAA. AO extending the remand to read a Service PE - validity. Secondment of employee to India - Salary paid to offshore entity whether FTS

Facts:

Assessee was a Canadian Company and they had seconded a senior employee in charge of Indian operations. The employee was in the control and management of the Indian entity with his salary etc. being paid from the appellant entity. The said secondment salary etc. were back charged to India. This was read to be FTS - fee for technical services under Indo-Canadian DTAA and was taxed in the hands of the appellant. On appeal to ITAT the ITAT ordered a factual examination of the case afresh to the AO. In the remand proceedings the AO brought a new issue that the secondment created a Service PE for the appellant in India besides once again upholding the reading of FTs. Aggrieved on higher appeal to ITAT by assessee -

Held in favour of the assessee that -

a) The seconded employee did not create a Service PE. The point of Service PE being brought afresh by the AO in the remanded proceedings deserves to be quashed.

b) The Secondment salary reimbursed by Indian counterpart is not Fee for Technical services

Applied :

Secondment charges reimbursed is not FTS -

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Flipkart Internet Pvt. Ltd. v. DCIT [WP No.3619/2021, dt. 24-6-2022] : 2022 TaxPub(DT) 4365 (Karn-HC)

Goldman Sachs Services Pvt. Ltd. v. DCIT 2022 TaxPub(DT) 3439 (Bang-Trib)

Dissented - Centrica India Offshore Pvt. Ltd. reported (2014) 44 taxmann.com 300

Verizon Data Services India (P) Ltd. v. AAR and Ors Madras HC

Cholamandalam MS General Insurance Co. Ltd., (2009) 309 ITR 356 (AAR) : 2009 TaxPub(DT) 1381 (AAR)

AT & S India Pvt Ltd., reported in (2006) 287 ITR 421 (AAR) : 2006 TaxPub(DT) 1856 (AAR)

Marks & Spencer Reliance India Pvt. Ltd. v. DIT reported in (2013) 38 taxmann.cm 190

DIT Vs. HCL Infosystems Ltd. reported in (2005) 144 Taxmann 492 (Delhi) : 2005 TaxPub(DT) 0132 (Del-HC)

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IDS Software Solutions v. ITO reported in (2009) 32 SOT 25 (Bag-Trib) : 2009 TaxPub(DT) 1346 (Bang-Trib)

Abbey Business Services (P) Ltd v. DCIT 2012 TaxPub(DT) 2833 (Bang-Trib) affirmed in DIT v. Abbey Business Services India (P) Ltd., 2020 TaxPub(DT) 5432 (Karn-HC).

Case: Owens Corning Insulating Systems Canada LP v. Dy. CIT 2023 TaxPub(DT) 2187 (Mum-Trib)