OWENS CORNING INSULATING SYSTEMS CANADA LP, MUMBAI V. DCIT (IT) CIRCLE 3(2)(2), MUMBAI

ITA 461/MUM/2022

AI Insights

The case revolves around the taxation of reimbursements made by Owens Corning India Pvt. Ltd. to Owens Corning Insulating Systems Canada LP for the salary and related costs of a seconded employee, Mr. Anindya Ghosh. The Indian tax authorities treated these reimbursements as 'Fees for Technical Services' (FTS) under section 9(1)(vii) of the Income Tax Act and Article 12 of the India-Canada DTAA, leading to a tax liability. The Tribunal, however, found that the reimbursements were merely cost recoveries without any profit element, and thus, should not be taxed as FTS. The Tribunal also addressed the issue of whether the assessee had a Service Permanent Establishment (PE) in India, concluding that it did not, as the seconded employee was under the control and supervision of the Indian entity and not providing any technical services.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299583 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 01-03-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 10-03-2022
• Other Referred Cases: M/s Google LLC vs JCIT, Sanmar Speciality Chemicals Ltd. vs ITO, DIT vs. Abbey Business Services India (P) Ltd., DIT vs. HCL Infosystems Ltd., Morgan Stanley vs. DIT, Volkswagen India Pvt. Ltd. vs CCE, Pune-1, Biesse Manufacturing Company (P.) Ltd. vs. ITO, Cholamandalam MS General Insurance Co. Ltd. vs. AT & S India Pvt Ltd, Marks & Spencer Reliance India Pvt.Ltd. vs. DIT, Goldman Sachs Services Pvt. Ltd. vs. DCIT, Faurecia Automative Holding (P.) Ltd. vs. DCIT, Burt Hill Designs (P) Ltd. vs. DDIT(IT)
• Laws Referred To: Income Tax Act, 1961, Double Taxation Avoidance Agreement between India and Canada
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; TDS; Set aside
• Section: 139; 143(3); 142(1); 234B; 201(1); 195; 143(2); 192; 113; 9(1); 9(1); 9(1); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.461/Mum./2022 (Assessment Year : 2013–14) Owens Corning Insulating Systems Canada LP C/o Owens Corning (India) Pvt. Ltd. 7 th Floor, Alpha Building, Hiranandani Gardens Powai, Mumbai 400 076 PAN – AADFO2598I ................ Appellant v/s Dy. Commissioner of Income Tax International Taxation, Circle–3(2)(2), Mumbai ................Respondent Assessee by : Shri Sandeep Bhalla a/w Ms. Kirti Dadlani Revenue by : Shri Soumendu Kumar Dash Date of Hearing – 02/03/2023 Date of Order – 29/03/2023 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned final assessment order dated 24/02/2022, passed under section 143(3) r/w section 254 r/w section 144C(13) of the Income Tax Act, 1961 ("the Act"), pursuant to the directions dated 27/01/2022, issued by the learned Dispute Resolution Panel–2, Mumbai–3, [“learned DRP”], under section 144C(5) of the Act for the assessment year 2013–14. 2. In this appeal, the assessee has raised the following grounds:- Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 2 “Re: Reimbursement of salary and other related costs by Owens Corning (India) Pvt Ltd (OCIPL) to the Appellant treated as "Fees for Technical Services". 1. The Assessing Officer/Dispute Resolution Panel has erred in taxing the reimbursed salary amount of Rs. 1,49,96,676 received by the Appellant during the year as fees for technical services' in terms of section 9(1)(vii) of the Income-tax Act, 1961 as well as under Article 12 of the Double Taxation Avoidance Agreement entered into and subsisting between India and Canada ("India-Canada DTAA") 2. The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the reimbursement of salary and other related costs received by it does not fall within the purview of the term fees for technical services' either under the Income-tax Act, 1961 or under the provisions of the India-Canada DTAA and the stand taken by the Assessing Officer/ Dispute Resolution Panel in this regard is misconceived, illegal, erroneous and incorrect. 3. The Appellant submits that the Assessing Officer be directed to delete the addition of Rs. 1,49,96,676 so made and to re-compute its total income accordingly. Re: Re-adjudication beyond scope 1. The Assessing Officer/Dispute Resolution Panel erred in re-adjudicating the secondment of employee as constituting service PE of the Appellant without appreciating the fact that Tribunal had remanded the case for adjudication of facts and not for re-establishing the character of income. 2. The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the assessment cannot go beyond the specific issue that was in the hands of the Assessing Officer pursuant to an order of remand passed by the Tribunal. 3. The Appellant submits that the stand taken by the Assessing Officer/ Dispute Resolution Panel in this regard is misconceived, illegal, erroneous and incorrect. Re: Secondment of employee held to be constituting Service PE of the Appellant in India 1. The Assessing Officer/Dispute Resolution Panel has erred in considering secondment of employee to be constituting Service PE of the Appellant in India in terms of Para 2(1) pf Article 5 of India-Canada DTAA. 2. The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the secondment of employee by the Appellant does not constitute 'Service PE' under the provisions of the India- Canada DTAA and the stand taken by the Assessing Officer/Dispute Resolution Panel in this regard is misconceived, illegal, erroneous and incorrect. Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 3 Re.: Levy of interest under section 234B of the Income-tax Act, 1961: 1. The Assessing Officer has erred in levying interest of Rs. 15,14,665 under section 234B of the Income-tax Act, 1961. 2. The Appellant submits that considering the facts and circumstances of the case and the law prevailing on the subject, no interest under section 234B is leviable and the stand taken by the Assessing Officer in this regard is misconceived, incorrect, erroneous and illegal. 3. The Appellant submits that the Assessing Officer be directed to delete the interest under section 2348 so levied on it and to re-compute its tax liability accordingly. Re.: General 1. The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal.” 3. The brief background of the case leading to the present appeal, as emanating from the record, are: The assessee is a company incorporated in Canada and is a group concern of Owens Corning group of companies, a leading manufacturer of glass. Owens Corning India Private Ltd is a company incorporated in India and is engaged in the manufacture of glass fibres in India. During the year under consideration, the assessee filed its return of income on 26/11/2013, declaring a total income of Rs. Nil. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the course of assessment proceedings, the assessee was asked to show cause as to why the reimbursement of expenses of Rs. 1,49,96,673, shown as a salary and other related costs should not be brought to tax as fees for technical services. In reply thereto, the assessee submitted that the said reimbursement is in relation to the salary paid to its employee Mr. Anindya Ghosh, who was seconded to Owens Corning India Private Ltd, and the said Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 4 payment was reimbursed by Owens Corning India Private Ltd. The assessee further submitted that the services rendered by the aforesaid employee of the assessee are nature of managerial services and therefore they do not fall in the category of „fees for included services‟ as defined under Article 12(4) of the India Canada Double Taxation Avoidance Agreement (“DTAA”). The Assessing Officer (“AO”) vide draft assessment order passed under section 143(3) r/w section 144C(1) of the Act did not agree with the submissions of the assessee and held that the reimbursement of expenditure received by the assessee is in fact fees for included services under the provisions of DTAA and fees for technical services under section 9(1)(vii) of the Act. In further proceedings, the learned DRP vide its directions dated 21/10/2016, issued under section 144C(5) of the Act rejected the objections filed by the assessee. In conformity, the AO passed the final assessment order dated 21/11/2016, passed under section 143(3) r/w section 144C(13) of the Act assessing the total income of the assessee at Rs. 1,49,96,680 after making the addition of Rs. 1,49,96,676, by treating the reimbursement of expenses as fees for technical services/fees for included services. In an appeal against the aforesaid final assessment order, the coordinate bench of the Tribunal vide order dated 16/07/2019, passed in ITA No. 7583/Mum/2016, set aside the final assessment order and remanded the matter to the AO for the re-appreciation of the correct facts and re-adjudication of the matter. 4. Pursuant to the aforesaid directions issued by the coordinate bench of the Tribunal, the AO again issued notices under section 143(2) and section 142(1) of the Act along with a questionnaire. In response thereto, the Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 5 assessee submitted that the work done by the seconded employee, i.e. Mr. Anindya Ghosh, as an employee of the assessee to Owens Corning India Private Ltd is not in the nature of managerial services and did not make available any technical knowledge, experience, skill, know-how or processes. Nor did it consist of the development and transfer of a technical plan or a technical design and hence the same does not fall within the purview of the term „fees for included services‟ as defined under Article 12(4) of the India Canada DTAA. The AO vide draft assessment order dated 23/04/2021, passed under section 143(3) r/w section 254 of the Act did not agree with the submissions of the assessee and after considering the qualification of the seconded employee and his rank in the organisation held that the reimbursement of salary and related cost received by the assessee from Owens Corning India Private Ltd. is in the nature of fees for technical services under the provisions of the Act and fees for included services under the provisions of the India Canada DTAA. Without prejudice, the AO also held that the assessee company has the Service Permanent Establishment (“Service PE”) in India during the year under consideration on the basis that the seconded employee was sent to India to manage the affairs of Owens Corning India Private Ltd and for all practical purposes, the employee remain a permanent employee of the assessee, even though stationed in India. The assessee filed detailed objections before the learned DRP against the findings and addition made in the draft assessment order. Vide directions dated 27/01/2022, issued under section 144C(5) of the Act, the learned DRP rejected the objections filed by the assessee and held that the reimbursement of expenses received by the assessee is in the nature of fees for included Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 6 services/fees for technical services. The learned DRP also rejected the objections of the assessee regarding the AO going beyond the direction of the Tribunal in concluding that the assessee has Service PE in India. Since the AO‟s finding regarding fees for technical services/fees for included services was already confirmed, the learned DRP did not go into the question of attribution of profit to assessee‟s Service PE in India. In conformity with the directions issued by the learned DRP, the AO passed the impugned final assessment order under section 143(3) r/w section 254 r/w section 144C(13) of the Act taxing the amount of Rs.1,49,96,676, received by the assessee as reimbursement of expenses, as fees for technical services/fees for included services. Being aggrieved, the assessee is in appeal before us. 5. During the hearing, the learned Authorised Representative (“learned AR”) submitted that payment by Owens Corning India Private Ltd is reimbursement of salary and other related costs to the assessee in respect of the seconded employee without any markup or any profit element. Thus, it was submitted that pure reimbursement of salary incurred by the foreign company towards an employee seconded to the Indian company cannot be regarded as income in the hands of the foreign company. The learned AR further submitted that the services rendered by the seconded employee are in the nature of managerial services, which do not fall within the ambit of „fees for included services‟ as defined in Article 12(4) of the India Canada DTAA, since the same includes only the consideration for rendering any technical or consultancy services. It was also submitted that there is no make available of any technical knowledge, experience, skill, know-how, or processes by the Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 7 seconded employee. The learned AR submitted that since the receipt is reimbursement of salary, therefore the same is outside the purview of „fees for technical services‟ under the provisions of section 9(1)(vii) of the Act. On the issue of Service PE, the learned AR submitted that the AO has rendered findings beyond the scope of remand and thus the adjudication on this issue from a fresh perspective goes against the order of the Tribunal. 6. On the contrary, the learned Departmental Representative (“learned DR”) by vehemently relying upon the orders passed by the lower authorities submitted that the role played by the seconded employee is covered under the category of consultancy services and therefore falls within the definition of the term „fees for included services‟ as defined under the provisions of India Canada DTAA. The learned DR by referring to the findings of the learned DRP submitted that due to services provided by the seconded employee, the Indian company and its employees carry on the business model on their own without reference to the service provider, and thus the same also satisfies the condition of „make available‟. 7. We have considered the rival submissions and perused the material available on record. On 01/01/2012, the assessee entered into an Employee Secondment Agreement with Owens Corning India Private Ltd, whereby one of the employees of the assessee, i.e. Mr. Anindya Ghosh, was seconded to Owens Corning India Private Ltd for a limited period. As per the aforesaid Employee Secondment Agreement, the seconded employee will work under the control, direction, and supervision of Owens Corning India Private Ltd during his assignment and Owens Corning India Private Ltd shall have the right to Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 8 promote/discipline/suspend/take any action in respect of the seconded employee. It is further provided that the payroll of the seconded employee shall continue with the assessee for the limited purpose of continuation of Social Security/retiral benefits and for all other purposes Owens Corning India Private Ltd shall remain his employer during the period of assignment. It was further agreed that the salary of the seconded employee shall be paid by the assessee company, which shall thereafter be reimbursed on monthly basis without any markup, for which the assessee shall render an invoice to the Indian company for direct wage and benefit cost which were incurred by it in respect of the seconded employee. It was also agreed that since the seconded employee is an employee of Owens Corning India Private Ltd, it shall be responsible to fulfil the Indian withholding tax obligations on the salary of the seconded employee during this period. Accordingly, Owens Corning India Private Ltd issued Form no.16 to Mr. Anindya Ghosh in respect of the salary and perquisites paid to him, which forms part of the paper book. In terms of the Employee Secondment Agreement, the assessee received an amount of Rs. 1,49,96,673 from Owens Corning India Private Ltd as reimbursement of salary and other related costs incurred by the assessee company. There is no dispute regarding the roles and responsibilities of Mr. Anindya Ghosh, which are as under:- “The roles and responsibilities of Mr. Anindhya Ghosh as submitted by the assessee are as under: o formulating and successfully implementing company policy; o assuming full accountability for all company operations; o directing strategy towards the profitable growth and operation of the company; o closely monitoring the operating and financial results against plans and budgets; Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 9 o developing strategic operating plans that reflect the short term /long term objectives and priorities; o putting in place adequate operational planning and financial control systems; o maintaining the operational performance/ efficiency of the company; o representing the company to major customers/ vendors and trade associations; o building and maintaining an efficient executive team etc.” 8. In the 1 st round of assessment proceedings, the assessee was asked to show cause as to why the reimbursement of expenses shown as salary and other related costs should not be brought to tax as fees for technical services. It is evident from the record, the AO did not agree with the submissions of the assessee and held the reimbursement of expenses to be nothing but fees for included services under the provisions of the India Canada DTAA as well as fees for technical services under section 9(1)(vii) of the Act. However, while coming to the aforesaid conclusion, the AO made certain factual errors, such as the AO took into consideration the qualification of one Mr. Anil Gupta, instead of Mr. Anindya Ghosh. When the aforesaid factual anomaly was pointed out by the assessee, the coordinate bench of the Tribunal remanded the matter to the AO for re-appreciation of correct facts and re-adjudication of the matter in the light of the submissions made on behalf of the assessee. 9. In pursuance of the directions of the coordinate bench of the Tribunal, the AO issued a fresh show cause notice. In the 2 nd round, the AO after considering the qualification of the seconded employee, Mr. Anindya Ghosh, and his rank in the organisation as mentioned in his LinkedIn profile came to the conclusion that services rendered by the seconded employee are in the nature of fees for included service/fees for technical services. In addition to the aforesaid conclusion, the AO also held that since the assessee has sent a Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 10 seconded employee to manage the affairs of Owens Corning India Private Ltd and for all practical purposes, the employee remains a permanent employee of the assessee, even though stationed in India, therefore the assessee company had a Service PE in India, during the year consideration. Thus in the 2 nd round of proceedings, the AO has rendered its findings on a completely new issue, which was neither under consideration in the 1 st round of assessment proceedings nor was the subject matter of appeal before the Tribunal. It is pertinent to note that the order passed by the AO in the 2 nd round of proceedings is pursuant to the remand by the Tribunal and same was not pursuant to any revisionary order or order passed under reassessment proceedings and therefore was required to be confined to the directions of the Tribunal vis-à-vis the subject matter of appeal before the Tribunal. It is trite that the appellant cannot be placed in a worse position as a result of filing an appeal. Further, it is also trite that the Tribunal has no power under the Act to enhance the assessment in an appeal. The Hon‟ble Madras High Court in Sanmar Speciality Chemicals Ltd. vs ITO, [2018] 256 Taxman 46 (Madras) held that since the Tribunal has no power under the Act to enhance the assessment in an appeal, equally, it cannot be done on an order of remand being passed by the Tribunal to the AO. Therefore, what cannot be done directly cannot be done indirectly. In the present case, there was no finding of the Tribunal, while remanding the matter, as regards the Service PE of the assessee in India and the said finding was an altogether fresh conclusion reached by the AO in an order passed under section 143 (3) r/w section 254 r/w section 144C(13) of the Act, which in our consideration is beyond the Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 11 direction of the Tribunal and therefore is bad in law and is accordingly set aside. 10. On the issue of characterisation of the receipt of reimbursement of expenses as fees for technical services/fees for included services, both parties raised various submissions. We find that a similar issue came up for consideration before the coordinate bench of the Tribunal in M/s Google LLC vs JCIT, in IT(IT)A No. 167/Bang./2021 and IT(IT)A No. 688/Bang./2022, which is evident from para-2 of the order dated 20/02/2023, which reads as under:- “The assessee in both the appeals had raised several grounds. However, the solitary issue argued by the learned Sr. Counsel is that the AO/DRP erred in taxing the reimbursements of salaries of expat employees made by Google India Pvt. Ltd. (GPIL) to the assessee by characterising such reimbursements as fees for "technical services" (FTS) as per Explanation 2 to Section 9(1)(vii) of the Act as well as "Fees for Included services" (FIS) as per Article 12(4) of the DTAA between India and USA (India-US Tax Treaty).” 11. In the aforesaid decision, the coordinate bench of the Tribunal noted that the tax at source under section 192 of the Act against the salary and other allowances paid/payable to the seconded employees were deducted by the Indian company. The coordinate bench further noted that the salaries of such seconded employees were deposited in their overseas bank accounts, which were reimbursed by the Indian entity on a cost-to-cost basis and the seconded employees were working solely under the control and supervision of the Indian entity. Accordingly, the coordinate bench of the Tribunal decided the aforesaid issue in favour of the taxpayer by observing as under:- “9. Further the GIPL had duly deducted tax at source under Section 192 of the Act against salary and other allowances paid/payable to such seconded employees and deposited the same with the Government of India. This is evident from Form No. 16 issued by GIPL to its employees, which are placed on Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 12 record (refer pages 102 to 107 and 113 to 121 of DPP paper book for AY 2010- 11). Moreover, GIPL had obtained necessary registration for the said employees with Provident Fund and Foreigners Regional Registration Office and also made appropriate contributions towards social security benefits in India which forms part of their salary cost (evident from Form 16 of the employees that are placed on record). The assessee has also produced the visa stamped by the authorities concerned in the case of seconded employees wherein it is clearly shown as 'employment visa'. For the family members it is mere entry visa. In most of the cases the families of the seconded employees were in USA and due to convenience, salary of such employees were deposited in bank account of the employees in USA. When the salaries of such seconded employees are deposited in their bank accounts in USA, GIPL reimbursed the same to the assessee on cost to cost basis. The assessee has produced reconciliation of the amount payable in respect of expat employees vis-a-vis the salary and other perquisites, etc. paid to such employees (refer pages 180 & 181 of PB for AY 2010-11). But for a marginal difference on account of foreign exchange there is one to one reconciliation. Therefore in the real sense the payment made by GIPL to the assessee is nothing but reimbursement of cost relating to remuneration on certain employees who were seconded to GIPL from the assessee. 10. The AO in the draft assessment order has assumed that service agreement exist between assessee and GIPL for provision of services by assessee to GIPL. There is nothing on record to suggest that assumption of AO is correct. Moreover, the assessee has strongly denied the same. Based on factual background, it is clear that the seconded employees were working solely under control and supervision of Google India (GIPL) and not on behalf of assessee during the period of secondment. The assessee's role was merely to facilitate payment of salary on behalf of Google India (GIPL), which was reimbursed by GIPL on actual. On identical facts, the Bangalore Bench of the Tribunal in the case of Biesse Manufacturing Company (P.) Ltd. by following the judgement of the Hon'ble Jurisdictional High Court in the case of Flipkart Internet (P.) Ltd. (supra) and the Bangalore Bench of the Tribunal in the case Goldman Sachs Services (P) Ltd. (supra) had decided the issue in favour of the assessee. The contentions raised and the findings of the Tribunal in the assessee of Biesse Manufacturing Company (P.) Ltd. (supra) reads as follows: - "17. During the course of assessment proceedings, the AO noticed that the assessee has made payment to M/s. Biesse Spa, Italy towards secondment of employees deputed to India during the year under consideration for an amount of Rs. 1.39.07,427. The AO also noticed that no tax was deducted at source on these amounts paid to the AE and issued a show cause notice to the assessee as to why the amount should not be disallowed us. 40(a)(i). The assessee submitted that these were salaries paid to Italian employees working in India. The payment was made to the employees in Italy and the same was reimbursed by the assessee. The assessee also submitted that the seconded employees was under the payroll of the assessee and part of salary was paid in Italy for which the AE periodically raised invoice for reimbursement. The assessee also submitted that tax has been duly deducted us. 192B on the salary paid in India and in Italy and therefore no tax was liable to be deducted on the reimbursements made to the AE. The AO rejected the submissions of the assessee and proceeded to treat the payment as fees for technical services and held that the same was liable to be deducted at source us. 195 since the assessee has not deducted the tax, the AO disallowed the same. Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 13 18. With regard to reimbursement of expenses, the assessee submitted that expenditure on insurance expenses, travelling expenses which are reimbursed to AE in relation to the personnel who visited India for providing technical services. The AO disallowed an amount of Rs.55.33,442 paid as reimbursement to the AE for the reason that tax was not deducted at source. The DRP confirmed the addition. 19. Before us, the ld. AR submitted that the payments to AE are purely reimbursements and taxes u/s. 192B is duly deducted. In this regard, the ld. AR drew our attention to Form 16 of the seconded employee (pages 669 to 671 of PB) and the return of income of the seconded employee (pg. 676 to 691 of PB) to substantiate that the amount paid as salary to seconded employee has already suffered tax. The ld. AR further submitted that the amount paid is only reimbursement and therefore not liable to deduct tax at source. The ld. AR submitted that the Hon'ble Karnataka High Court in the case of Flipkart Internet Pvt. Ltd. v. DCIT (WP No.3619/2021) has considered the issue of TDS on reimbursement of salary cost of seconded employees in the context of issue of NIL TDS and directed that the certificate for NIL TDS be issued. It is therefore submitted that the issue under consideration being the applicability of TDS provisions on the reimbursement of salary cost of seconded employees is covered by the above decision of the jurisdictional High Court. The ld AR further relied on the decision of the coordinate bench of the Tribunal in the case of Goldman Sachs Services Pvt. Ltd. vs. DCIT [2022] 138 taxmann.com 162 (bang-Trib.). 20. The Id DR relied on the order of the lower authorities. 21. We have heard the rival submissions and perused the material on record. We notice that the Hon'ble Karnataka High Court in the case of Flipkart Internet Pvt. Ltd (supra) while considering the issue of NIL TDS certificate towards reimbursement of salary cost held as follows:- “33. In the present case, the stand taken on the material available is on the construction of legal position. As pointed out in the discussion earlier that the understanding of the legal position being erroneous, the only conclusion that could be arrived at is to allow the application. 34. Though the Revenue has raised numerous contentions that further information is required to record a detailed finding, such stand is taken up for the first time in the present proceedings A perusal of the file of the Department does not make out any instance where the Department had sought for further information which was not furnished On the contrary, the petitioner has made out detailed representation on the legal position and record does not reflect any requisition for further information remaining unanswered In fact, the Apex Court in GE India Technology Centre (P) Ltd. (supra) has rightly observed at para-16 as follows: "16. The fact that the Revenue has not obtained any information per se cannot be a ground to construe section 195 widely so as to require deduction of TAS even in a case where an amount paid is not chargeable to tax in India at all...” 35. Further, it must be noticed that the finding as regards deduction of tax at source under section 195 of the IT Act is tentative insofar as the Revenue is concerned Even if the Revenue orders that there was no obligation to make deduction under section 195, the question of liability of the recipient still remains to be decided subsequently Accordingly, the question of prejudice to the Revenue at the stage of section 195 order is unavailable to it. Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 14 36. Curiously, the file contains a note by the same DCIT who has eventually passed the impugned order, which note dated 10.03.2020 addressed to the CIT seeks for granting approval for granting deduction of TDS at the rate of zero per cent on cost-to-cost reimbursement However, the opinion was directed to be reconsidered as per the endorsement found in the file and eventually an order was passed by DCIT contrary to the earlier view and has rejected the application. 37. Accordingly, the findings in the impugned order and the conclusion regarding the employer-employee relationship is based on a wrong premise and is liable to be set aside As observed by this Court in DIT (International Taxation) v. Abbey Business Services India (P) Ltd. [2020] 122 taxmann.com 174 (Kar). "it is also pertinent to note that the Secondment Agreement constitutes an independent contract of services in respect of employment with assessee" Hence, the DCIT in the impugned order has missed this aspect of the matter and has proceeded to consider the aspect of rendering of service as to whether it was 'FIS'. 38. In light of setting aside of the impugned order in the context of legal position as noticed, the only order that can now be passed is of one granting 'nil tax deduction at source'. 39. Accordingly, in light of the above discussion, the impugned order at Annexure-A dated 1-5-2020 is set aside and the respondent No. 1 is directed to issue a Certificate under section 195(2) of IT Act to the effect of 'Nil Tax education at Source' as regards the petitioner's application dated 15-1-2020.” 22. We also notice that the coordinate bench of the Tribunal in the case Goldman Sachs Services Pvt. Ltd. (supra) has considered a similar issued and held that- "26.9. Admittedly, the assessee deducted tax at source u/s. 192 of the Act, on the 100% salary paid to the seconded employees, and paid the same to the credit of the Central Government. The assessee only reimbursed part of the salary cost of the seconded employee to overseas entity that has already subjected to TDS under section 192 of the Act. And therefore, at the time of making such reimbursement, to overseas entity, no taxes were deducted at source by the assessee in respect of reimbursements made as, according to the assessee, it was in the nature of cost-to-cost reimbursement, and, no element of income was involved. 26.10. The assessee in India does the TDS on 100% salaries u/s 192 and pay the same to the credit of the Central Government. Form 16 at page 228-230 issued to Christopher Roberts of PB Vol I, by the assessee in Indian, Certificate under section 203 of TDS having deducted at source and further indicates the following-  Employee has a PAN number in India  Total taxable salary is Rs 9,761,581 (this corresponds to the US$ 130.000 as total compensation indicated in the local employment contract at para 4  The Indian company does full TDS on 100% of the salaries, although 25% is paid in India and balance 75% outside India  TDS done is Rs 2,834,300/-, which translates to 30.8% of Rs 9,761,58  Employee also contributes to Indian provident fund Rs. 2,57,885/- Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 15 26.11. From conjoint reading of Article 15 of the OECD Model Convention and the articled referred to herein above, there is no doubt in our minds that the assessee in India is the economic and de facto employer of the seconded employees. It is an admitted fact that all the seconded employees are in India for more that 183 days in a 12 month period. Further all the seconded employees have PAN card as well as file their returns in India in respect of the 100% salary, though the assessee pays only part of the salary in India. 26.12. The definition of FTS under the Act is given in Explanation 2 to Sec. 9(1)(vii) of the Act that reads as follows:- "Income deemed to accrue or arise in India. 9.(1) The following incomes shall be deemed to accrue or arise in India:- (i) to (vi) ** (vii) income by way of fees for technical services payable by– (a) the Government, or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India: or (c) a person who is a non-resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India: Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government. Explanation 1.-For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date. Explanation 2. For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". 26.13. The definition of FTS under the Act excludes "consideration which would be income of the recipient chargeable under the head salaries." If the seconded employee is regarded as employee of the assessee in India, then the reimbursement to overseas entity, by the assessee in India would not be in the nature of FTS, but would be in the nature of salary', and therefore, the reimbursements cannot be chargeable to tax in the hands of overseas Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 16 entity, and therefore there would be no obligation to deduct tax at source at the time of making payment u/s. 195 of the Act. 26.14. Article 12(4)-(5) of India USA, DTAA deals with "Fees for technical services, as under: "4. For purposes of this Article, "fees for included services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services: (a) are ancillary and subsidiary to the application or enjoyment of the right. property or information for which a payment described in paragraph 3 is received; or (b) make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design. 5. Notwithstanding paragraph 4. "fees for included services" does not include amounts paid: (a) for services that are ancillary and subsidiary, as well as inextricably and essentially linked, to the sale of property other than a sale described in paragraph 3(a): (b) for services that are ancillary and subsidiary to the rental of ships, aircraft, containers or other equipment used in connection with the operation of ships or aircraft in international traffic; (c) for teaching in or by educational institutions; (d) for services for the personal use of the individual or individuals making the payment; or (e) to an employee of the person making the payments or to any individual or firm of individuals (other than a company) for professional services as defined in Article 15 (Independent Personal Services)." 27. Rendering of managerial, technical and consultancy services is governed by Article 12 on Fees for included services of the Double Tax Avoidance Agreement, between India and US. Payments made to 'individual or firm of individuals for service rendered by them in independent professional capacity are specifically excluded since they are covered by Article 15 on Independent Personal Services. Likewise, Article 12 specifically excludes payments made towards services rendered by an 'employee' of the enterprise since services rendered under employment are covered by Article 16 on Dependent Personal Services. 28. The relevant portion of para 5(e) of Article 12 of the DTAA between India and US reads as follows: - "Fees for included services does not include payments made to an 'employee of the person making the payment or to any individual or firm of individuals (other than a company) for professional services as defined in article 15 (Independent Personal Services). The payments made by the Indian entity to the overseas entity is towards reimbursement of salary paid by the overseas entity to the Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 17 seconded personnel. As discussed in para 14.2 to 14.7 above, for the purpose of Article 15 of the OECD Model Commentary (corresponding to Article 16 of the DTAA between India and US), the seconded personnel are employees of the Indian entity, being the economic employer. It is to be noted that the understanding as to who is the 'employee' in order to be excluded from. "fees for technical services", cannot be inconsistent with the understanding of employee for the purpose of Article 15 on income from employment, especially when Article 15 is an anti-abuse provision. 29. The Ld. DCIT placed reliance on the decision of the Hon'ble Delhi High Court in the case of Centrica India Offshore Pvt. Ltd. reported (2014) 44 taxmann.com 300 concluded that the reimbursement was FTS and that services provided make available technical skill or knowledge for use by the assessee. 29.1. In case of the decision of Hon'ble Delhi High Court in the case of Centrica India Offshore Pvt.Ltd vs. CIT(supra) dealt with identical case of reimbursement of salaries paid to expatriate employees. The Hon'ble Court held that, overseas entities had, through seconded employees, undoubtedly provided technical' services to Centrica India and that, the expression rendering technical services expressly includes provision of services of personnel. The Hon'ble Court held that the Seconded employees, were provided by overseas entities and work conducted by them thus, i.e., assistance in conducting business of assessee of quality control and management was through overseas entities. The Hon'ble Court also held that, mere fact that secondment agreement, phrases payment made by Centrica India to overseas entity as 'reimbursement' could not be determinative. It was also held that, the fact that overseas entity did not charge mark-up over and above costs of maintaining secondee could not negate nature of transaction. 29.2 Hon'ble Pune Tribunal in case of M/s. Faurecia Automative Holding (supra) has observed as under: "4.10. We have gone through the facts of the case obtaining in Centrica India (supra). The assessee therein contended that payment to foreign party towards seconded employees was only reimbursement and hence, no income was chargeable to tax in its hands. The Authority for Advance Ruling (AAR) held that payment made by the petitioner to the overseas entity was in the nature of income in view of the existence of Service Permanent establishment (PE) in India and hence liable for tax withholding Overturning the view of the AAR that Service PE was constituted, the Hon'ble High Court held that the payment to AE was in the nature of fees for technical services' and not reimbursement of expenses and further laid down that the nomenclature of reimbursement was not decisive. It noted that: 'Money paid by assessee to overseas entity accrues to overseas entity which may or may not apply it for payment to secondees, based on its contractual relationship with them.' It is perceptible that in that case money paid by the Indian entity accrued to overseas entities only, which could or could not have been paid to the secondees depending upon the terms of contract. Per contra, we are confronted with a situation wherein the money never accrued to the assessee. It initially paid money to Mr. Franck in advance and then M/s. Faurecia Automotive Holding recovered the same from the Indian entity without any mark-up. There can be no question of the assessee receiving money in its own independent right. Rather, it is a case of discharge by the Indian entity of its own liability towards salary payable to Mr. Franck. Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 18 It is thus manifest that this decision has no application to the facts of the instant case.” 29.3 We also note that, reliance is placed on the decision of Hon'ble Madras High Court in case of Verizon Data Services India (P) Ltd. v. AAR and Ors(supra), wherein it is held that, the reimbursement of salary of expatriates to foreign co by Indian company results in taxable income in the hands of the foreign company. Hon'ble High Court also upheld the observations of AAR, wherein it characterized the secondment of personnel as provision of managerial services. However, the Hon 'be Court set aside the ruling of Hon'ble AAR, wherein it held that, the reimbursement of salary of expatriates constitutes fees for included services in terms of Article 12(4) of India USA DTAA. Therefore, reliance placed on this decision is of no assistance to revenue. 29.4 There is another decision of Hon'ble Supreme Court in case of DIT v Morgan Stanley reported in (2007) 162 Taxman 165, wherein, it is held that, in case of deputation, the entity to whom the employees have been deputed cannot be regarded as employer of such employees as the employees continue to have lien on his employment with the entity which deputes him. Entity seconding the employee is the employer as it retained the right over seconded employee is also held by Hon 'ble AAR in case of AT & S India Pvt Ltd., reported in 287 ITR 421. 29.5 The observations of the Hon'ble Supreme Court in the case of Morgan Stanley (supra) were in the context of existence of service PE. This is clear from a reading of the relevant portion of the judgment of the Hon'ble Supreme Court, which is as follows:- "As regards the question of deputation, an employee of MSCo when deputed to MSAS does not become an employee of MSAS. IT(TP)A No.338/Bang/2021 Page 22 of 32 A deputationist has a lien on his employment with MSCo. As long as the lien remains with the MSCo the said company retains control over the deputationist's terms and employment. The concept of a service PE finds place in the UN Convention. It is constituted if the multinational enterprise renders services through its employees in India provided the services are rendered for a specified period. In this case, it extends to two years on the request of MSAS. It is important to note that where the activities of the multinational enterprise entail it being responsible for the work of deputationists and the employees continue to be on the payroll of the multinational enterprise or they continue to have their lien on their jobs with the multinational enterprise, a service PE can emerge. Applying the above tests to the facts of this case, it is found that on request/requisition from MSAS the applicant deputes its staff. The request comes from MSAS depending upon its requirement. Generally, occasions do arise when MSAS needs the expertise of the staff of MSCo. In such circumstances, generally. MSAS makes a request to MSCo. A deputationist under such circumstances is expected to be experienced in banking and finance. On completion of his tenure he is repatriated to his parent job. He retains his lien when he comes to India. He lends his experience to MSAS in India as an employee of MSCo as he retains his lien and in that sense there is a service PE (MSAS) under art 5(2)(1). There is no infirmity in the ruling of the AAR on this aspect. In the above situation, MSCo is rendering services through its employees to MSAS. Therefore, the Department is right in its contention that under the above situation there exists a service PE in India (MSAS)." Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 19 29.6 Per contra, in the present facts of the case there is no finding, of their existing PE, in any form by the revenue and therefore is of no assistance to the revenue. 29.7 As far as the decision of Hon'ble AAR in the case of AT & S (supra) is concerned, the facts of the said case were that AT&S, a company incorporated in Austria, offered services of technical experts to applicant, a IT(TP)A No.338/Bang/2021 Page 23 of 32 resident company, pursuant to a foreign collaboration agreement on the terms and conditions contained in secondment agreement. Under the secondment agreement the applicant is required to compensate AT&S for all costs directly or indirectly arising from the secondment of the personnel, and the compensation is not limited to salary, bonus, benefits, personal travel, etc. but also includes other items. On the above facts. Hon'ble AAR ruled that the Contention that the payments are only in the nature of reimbursement of actual expenditure is not supported by any evidence and there is no material to show what actual expenditure was incurred by AT&S and what was claimed as reimbursement. A part of the salary of seconded personnel is paid by the applicant in Indian rupees and the remaining part is paid by the applicant to AT&S in Euro. While working with the applicant, the seconded personnel are required to comply with the regulations of the applicant, but they would go back to the AT&S on the expiry of assignment. Aforesaid terms and conditions show that the seconded personnel in effect continue to be employees of AT&S. Recipient of the compensation is AT&S and not the seconded employees. Further contention was that AT&S is not engaged in the business of providing technical services in the ordinary course of its business is also not tenable. Therefore, payments made to AT&S by the applicant are for rendering "services of technical or other personnel" and are in the nature of fees for technical services within the meaning of Explanation 2 to sub clause (vii) of section 9(1) and Article 12(4) of the relevant DTAA and are subject to deduction of tax at source under section 195. 30.1 The ruling of Hon'ble AAR is on the factual finding that payments were not only reimbursement of actual salary, bonus etc., but was also included other sums. 30.2 Per contra in the present facts of the case, it is not at all the contention of the revenue that, something over and above what was paid as salary, bonus etc. 30.3 Liability under section 195 to deduct tax at source when making payment to a non-resident arises, only if, sum paid is chargeable to tax in India. Payment of salaries is not covered under section 195. Thus, it is necessary to take into consideration following aspect to determine Payments to enterprise seconding employees, the Indian entity has an obligation to deduct tax source u/s 195: (i) Payment of fees by an enterprise (Indian entity) to foreign entity for seconding employees; (ii) Reimbursement of salaries to the entity seconding the employees (foreign entity) from the entity to whom employees have been seconded (Indian entity). 31. Payment for supplying skilled manpower cannot be regarded as payment towards managerial, technical and consultancy services as per dictionary meanings of these terms. Hon'ble AAR in Cholamandalam MS General Insurance Co. Ltd., reported in 309 ITR 356, took the view that, merely supplying technical, managerial or personnel with managerial skills cannot Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 20 be regarded as rendering technical services by the person supply such personnel. The following were the relevant observations of Hon'ble AAR- "It is debatable whether the bracketted words "including provision of services of technical or other personnel" is independent of preceding terminology - "managerial, technical or consultancy services" or whether the bracketted words are to be regarded as integral part of managerial, technical or consultancy services undertaken by the payee of fee. In other words, is the bracketted clause a stand alone provision or is it inextricably connected with the said services? HMFICL itself does not render any service of the nature of managerial, technical or consultancy to the applicant and it has not deputed its employee to carry out such services on its behalf. There is no agreement for rendering such services. In this factual situation, it is possible to contend that merely providing the service of a technical person for a specified period in mutual business interest not as a part of technical or consultancy service package but independent of it, does not fall within the ambit of S.9(1)(vii)." 32. Hon'ble Bombay High Court in case of Marks & Spencer Reliance India Pvt.Ltd. VS. DIT reported in (2013) 38 taxmann.cm 190, upheld the view of Hon'ble Mumbai Tribunal which held that, payment towards reimbursement of salary expenditure without any element of profit, would not be taxable under the provisions of the Act. Hon'ble Court also held that, when the entire salary has been subjected to tax in India at the highest average tax rate, the assessee could not held to be in default for not without tax under the provisions of the Act. 33. Hon'ble Delhi High Court in the case of DIT Vs. HCL Infosystems Ltd. reported in (2005) 144 Taxmann 492 (Delhi) upheld the order of Hon'ble Delhi Tribunal which held that, when an Indian company had already deducted and remitted taxes under Sec.192 of the Act on salaries paid abroad to the technical personnel and when such salary is reimbursed on a cost to cost basis without any profit element, the provisions of Sec. 195 of the Act cannot be applied to reimbursement of salaries made to foreign company, once again. 34. Coordinate bench of this Tribunal in case of IDS Software Solutions v. ITO reported in (2009) 32 SOT 25, Abbey Business Services (P) Ltd v. DCIT reported in (2012) 23 taxmann.com 346, took the view that expats are deputed to work under the control and supervision of the Indian company and that the oversees entity is not responsible for the actions of the expatriate employees. Thus, oversees entity does not render any technical service to the Indian company, since such payment are towards reimbursement of salary cost borne by oversees entity, and that, no income can be said to accrue to oversees entity in India. The decision of this Tribunal in case of Abbey(supra) has been upheld by Hon'ble Karnataka High Court in DIT vs. Abbey Business Services India (P)Ltd., reported in (2020) 122 taxmann.com 174. 35. Hon'ble Ahmedabad Tribunal in the case of Burt Hill Designs (P) Ltd. vs. DDIT(IT) (2017) 79 taxmann.com 459, on identical facts, as in the case of the present assessee before us, took the view that, there was no liability to deduct tax at source ws.195 when payments were made by way of reimbursement. Based on the above detailed analysis of various contrary decisions on the issue, we are of the view that the decisions relied by revenue are distinguishable with the present facts of the case. Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 21 Further, in the present facts we note that, the concept of make-available is not satisfied in the instant case. As per para 4(b) of Article 12 of the India- US DTAA on 'Royalties and fees for included services: "4. For purposes of this Article, "fees for included services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services a & b.** make available technical knowledge, experience, skill, know-how, or skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design.” Thus, even if the rendering of service by the seconded personnel constitutes a contract for service, in the absence of making available any technical knowledge or skill to the Indian entity, the same shall not constitute fees for technical services. In support we refer to the decision of Hon'ble Karnataka High Court in the case of CIT vs. De Beers India Minerals Pvt. Ltd. reported in (2012) 21 taxmann.com 214. on the concept of 'make available, observed and held as under: "What is the meaning of 'make available'. The technical or consultancy service rendered should be of such a nature that it makes available' to the recipient technical knowledge, know-how and the like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words, to fit into the terminology 'making available', the technical knowledge, skills, etc., must remain with the person receiving the services even after the particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider Technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service, within the meaning of paragraph (4)(b). Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available. In other words, payment of consideration would be regarded as 'fee for technical/included services' only if the twin test of rendering services and making technical knowledge available at the same time is satisfied. 36. The Ld. AR has placed before this Tribunal a decision rendered by Hon'ble CESTAT. Bangalore, wherein the Hon'ble CESTAT was deciding. whether the assessee in India, was required to pay service tax demand (on reverse charge basis) on the secondment reimbursements, on the basis that the same amounts to "manpower recruitment & supply agency services", placed at page 66-86. The Hon'ble CESTAT, Bangalore, held that employer- employee relationship exist between the seconded employee and the assessee in India in para 14 of the order passed by Hon'ble CESTAT, Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 22 Bangalore. The Hon'ble CESTAT, Bangalore, further held that, there is no manpower supply services since assessee in India is the real employer by reason of the employment contract. Service tax demand was deleted. The relevant extracts are below- 6. Submitting on the demand of Service Tax under the category "Manpower Recruitment & Supply Agency Service", the learned counsel states that the employer-employee relationship exists between the Appellant and Seconded Personnel who have been sent on secondment to the Appellant; the Appellant has entered into separate employment contract with the Seconded Personnel. The seconded Personnel, during the period of secondment, work under the control and supervision of the Appellant: In terms of the employment contract, the appellant is under obligation to pay salary (including other entitlements) to the Seconded Personnel during the period of secondment in foreign exchange in his home country: for administrative convenience, the Appellant remits the salary payable to the Seconded Personnel in his home country in Foreign Exchange through the Seconder Company: the Seconded Personnel, as required under the Income Tax Act, 1961, files their respective returns under Section 139 of Income Tax Act, 1961 and shows the entire salary paid by the Appellant (including part of the salary paid in Foreign Exchange) as his/her income as salaries and pays the income tax thereon...... 14. Coming to the third issue of payment of salary, allowances and expenses of the personnel drawn from different global entities to work with the appellant, we find that learned Counsel submits that the employer-employee relationship exists between the Appellant and Seconded Personnel who have been sent on secondment to the Appellant; the Appellant has entered into separate employment contract with the Seconded Personnel. The seconded Personnel, during the period of secondment, work under the control and supervision of the Appellant; In terms of the employment contract, the appellant is under obligation to pay salary (including other entitlements) to the Seconded Personnel during the period of secondment in foreign exchange in his home country; for administrative convenience, the Appellant remits the salary payable to the Seconded Personnel in his home country in Foreign Exchange through the Seconder Company; the Seconded Personnel, as required under the Income Tax Act, 1961. We find that the issue is no longer res integra and is covered by decision of Volkswagen India Pvt. Ltd. Vs CCE, Pune-1, 2014 (34) STR 135 (Tri. Mumbai) [maintained by Apex Court in 2016 (42) S.TR. J145 (S.C.)] wherein it was held that: 5.1 In view of the clauses of agreements noticed herein above and other facts, we hold that the global employees working under the appellant are working as their employees and having employee employer relationship. It is further held that there is no supply of manpower service rendered to the appellant by the foreign/holding company. The method of disbursement of salary cannot determine the nature of transaction. 15. The learned Counsel for the appellants submits that the Department was fully aware of the facts when the SCN dated 27.10.2009 was issued and therefore no suppression of facts with an intent to evade payment of duty can be alleged in the subsequent SCN dated 15.04.2013. He relies upon Nizam Sugar Factory case (supra). We find that the argument is acceptable and for this reason, the second SCN is liable to be set aside ab initio..... 16. In view of the above, Appeal No. ST/25566/2013 & Appeal No.ST/21705/ 2016 are allowed. Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 23 Thus, the above decision of Hon'ble CESTST Tribunal further strengthens assessee's case. We therefore, hold that, the amount reimbursed by the assessee to the overseas entity cannot be subjected to tax in India as there does not involve any element of income embedded in it. 37. Respectfully following the above views expressed by Hon'ble Karnataka High Court in DIT vs. Abbey Business Services India (P)Ltd.(supra), Hon'ble AAR in Cholamandalam MS General Insurance Co. Ltd. (supra), Hon'ble Bombay High Court in case of Marks & Spencer Reliance India Pvt. Ltd. vs. DIT (supra). Hon'ble Delhi High Court in the case of DIT Vs. HCL Infosystems Ltd. (supra). Coordinate bench of this Tribunal in case of IDS Software Solutions vs. ITO (supra), Hon'ble Pune Tribunal in case of M/s. Faurecia Automative Holding(supra). Hon 'ble Ahmedabad Tribunal in the case of Burt Hill Designs (P) Ltd. vs. DDIT(IT) (supra), we are of the view that the reimbursement made by the assessee in India to overseas entity, towards the seconded employees cannot be regarded as "Fee For technical Services" Once there is no violation of provision of section 195, assessee cannot be held to be an assessee in default under section 201(1) of the Act for all the years under consideration. We therefore direct the Ld.AO to delete the interest levied under section 201(LA) of the Act for all the years under consideration. 23. In assessee's case on perusal of records it is noticed that the seconded employee is in the payroll of the assessee and tax has duly been deducted on the salary paid to the employee including what is paid in Italy. It is also noticed that The reimbursement has also been taken into account for the purpose of TDS u/s.192B. We further notice that the reimbursement of expenses towards insurance, travelling expenses of the visiting employees is a cost to cost reimbursement with no element of income. Therefore, respectfully following the ratio laid down by the Hon'ble Karnataka High Court and also the decision of the coordinate bench of the Tribunal we hold that the reimbursement towards secondment charges and reimbursement of expenses are not liable for tax deduction w/s. 195 and therefore the disallowance made w/s. 40(a)(i) is not warranted on this count." 11. In light of the judgement of Hon'ble Jurisdictional High Court in the case Flipkart Internet (P.) Ltd. which was followed by the coordinate bench order of Bangalore Tribunal in the case Biesse Manufacturing Company (P.) Ltd. (supra) we hold that the amounts paid by GIPL to the assessee with reference to seconded employees does not come within the 'FTS' or 'FIS' under the Act or under DTAA. It is ordered accordingly.” 12. Since in the present case similar issue arising from a similar factual matrix is involved, therefore respectfully following the aforesaid decision of the coordinate bench of the Tribunal, we direct the AO to delete the impugned addition on account of reimbursement of salary and other related costs received by the assessee. Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Page | 24 13. As regards the issue of levy of interest under section 234B of the Act, in view of the decision of Hon‟ble Supreme Court in DIT v. Mitsubishi Corporation, [2021] 438 ITR 174 (SC), the same is rendered consequential in nature and therefore is allowed for statistical purposes. 14. In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 29/03/2023 Sd/- M. BALAGANESH ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 29/03/2023 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai