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2020 (1) TMI 1474 - AUTHORITY FOR ADVANCE RULINGS — MUMBAI BENCH (INCOME-TAX)TDS u/s 195/192 - reimbursement of the salary and benefits payable by the applicant to the expatriate personnel - inter-company agreement between KRP and the applicant - applicant requested KRP, a wholly owned subsidiary of PMK, for the supply of such experienced expatriate personnel - social security contribution, insurance and relocation expenses payable by the applicant to the expatriate personnel in their home country - HELD THAT:- Provision of services or provision of personnel could be camouflaged as secondment agreements but in the current case it does not seem that any useful purpose is served by cloaking only a very small fraction of obligated payments as reimbursements. It is not a case where entire or substantive salary is paid outside India and then the same is claimed as reimbursement. In that scenario there is possibility of manipulating receipts and relocating it to different accounts of the group companies. Moreover, the entire salary including the reimbursed component has been offered for tax in India by the seconded employees. Given these peculiar facts, we are of the considered view that the social security, insurance, relocation expenses which are in the nature of committed and obligated payments are in the nature of reimbursements and not fee for technical services. In regard to administrative expenditure paid to KRP for performing the facilitative and disbursing agency role, the applicant has himself admitted that payments are subject to tax deduction under section 195 (para 8.2.27 of rejoinder letter) and though no specific submissions were made by the learned authorised representative about its nature, we presume that in the light of the admitted question the applicant has no objection for treating the charges as fees for technical services and thus the issue does not require our adjudication. Ruling: 1. The social security, insurance, relocation expenses which are in the nature of committed and obligated payments are in the nature of reimbursements and not fee for technical services. 2. As admitted by learned authorised representative, the administrative fee paid to KRP is liable for tax deduction under section 195 as fee for technical services.
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