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| The Tax Publishers2020 TaxPub(DT) 2990 (Del-Trib) : (2020) 206 TTJ 0657 INCOME TAX ACT, 1961
Section 9
Where assessee-company, incorporated in Singapore, received reimbursement from Indian company, with which assessee had technology license agreement, as employee seconded by Indian company was not working as an employee of assessee, in absence of any element of income, it was a case of cost to cost reimbursement and same could not be treated as fees for technical services.
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Income deemed to accrue or arise in India - Chargeability - Fees for technical services - Employee seconded by Indian company to foreign AE
Assessee was a company incorporated in Singapore, engaged in franchising KFC, Pizza Hut and Taco Bell brands for a number of territories, including India. For operation of restaurant outlets, it entered into Technology License Agreement (TLA) for license of 'Technology' and 'System' with Indian company (YRIPL). Royalty income was offered to tax in India on basis of tax rates prescribed in DTAA between India and Singapore. AO alleged that person employed by assessee, working under the Indian entity, were seconded to India; and salary of the said person was reimbursed by the Indian entity and was taxable in hands of the assessee. Held: Under article 12 of DTAA, FTS is taxable, if 'make available clause' is fulfilled, which was not the case of assessee. In absence of any element of income, it was a case of cost to cost reimbursement and same could not be treated as FTS. It was a case of pure reimbursement being received by the assessee company and in the absence of any element of income, reimbursement per se was not taxable in the hands of the assessee company. Further, employee already paid taxes on the said income in India and taxing the said amount as FTS would amount to double taxation.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2008-09
INCOME TAX ACT, 1961
Section 9
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