{"id":537,"date":"2009-03-13T09:12:03","date_gmt":"2009-03-13T09:12:03","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=537"},"modified":"2009-03-13T09:12:03","modified_gmt":"2009-03-13T09:12:03","slug":"ids-software-solutions-vs-ito-itat-bangalore","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/ids-software-solutions-vs-ito-itat-bangalore\/","title":{"rendered":"IDS Software Solutions vs. ITO (ITAT Bangalore)"},"content":{"rendered":"\n\n
Click here to download the judgement (IDS_software_secondment_employee.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n

Tax implications of ’employee secondment’ contracts<\/strong><\/p>\n

Where the assessee entered into a \u2018secondment agreement\u2019 with a US Company and obtained the services of an employee and the question arose whether the reimbursement by the assessee to the US Company of the salary paid by the US Company was chargeable to tax as \u201cfees for technical services\u201d HELD: <\/p>\n

(i) Though the US Co was the employer in a legal sense but since the services of the employee had been seconded to the assessee and since the assessee was to reimburse the emoluments and it controlled the services of the employee, it was the assessee which for all practical purposes was the employer. Accordingly, the salary reimbursed to the US Co was not chargeable to tax;<\/p>\n

(ii) Though the person deputed by the US Co was a technical person, the consideration paid under the secondment agreement was not \u201cfees for technical services\u201d because the fact that the seconded employee was responsible and subservient to the payer (assessee) and was required to also act as officer or authorized signatory or nominee of the assessee made it inconsistent with an agreement for providing technical services.<\/p>\n

AT & S India P. Ltd <\/strong> 287 ITR 421 (AAR) \u2013 where a secondment agreement was held to constitute technical services distinguished. <\/p>\n","protected":false},"excerpt":{"rendered":"

Where the assessee entered into a \u2018secondment agreement\u2019 with a US Company and obtained the services of an employee and the question arose whether the reimbursement by the assessee to the US Company of the salary paid by the US Company was chargeable to tax as \u201cfees for technical services\u201d HELD: <\/p>\n

 <\/p>\n

(i) Though the US Co was the employer in a legal sense but since the services of the employee had been seconded to the assessee and since the assessee was to reimburse the emoluments and it controlled the services of the employee, it was the assessee which for all practical purposes was the employer. Accordingly, the salary reimbursed to the US Co was not chargeable to tax;<\/p>\n

 <\/p>\n

(ii) Though the person deputed by the US Co was a technical person, the consideration paid under the secondment agreement was not \u201cfees for technical services\u201d because the fact that the seconded employee was responsible and subservient to the payer (assessee) and was required to also act as officer or authorized signatory or nominee of the assessee made it inconsistent with an agreement for providing technical services.<\/p>\n

 <\/p>\n

AT & S India P. Ltd <\/strong> 287 ITR 421 (AAR) \u2013 where a secondment agreement was held to constitute technical services distinguished. <\/p>\n

Read more ›<\/a><\/div>\n

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