Held, that, the payments made by the branch office to the head office were reimbursements on a cost-to-cost basis without any mark-up of salary cost of the expatriate employees working in the branch office in India. The entire salary payments made to the expatriate employees in India as well as outside India have been subject to deduction of TDS u/s. 192 of the Act which fact had been corroborated by Form 16 issued to the expatriate employees. The assessee had duly filed its return of income in India in respect of its business income attributable to its branch office in India. No record was brought by the AO to show that the head office had provided any technical services to the branch office and in consequence thereof has paid fees for technical services. The expatriate employees have been working for the branch office under its complete supervision for many years and have become residents of India by virtue of their continuous stay for many years in India. Where the assessee had deducted the tax at source under section 192 of the Act and deposited it in the Government account within the specified time as prescribed under the Act, the provisions of s. 40(a)(i) of the Act were not applicable. The disallowance of salary cost reimbursement by the branch office to the head office by the AO u/s. 40(a)(i) was not justified as tax had been duly deducted at source on the entire salary payments to the expatriate employees and deposited in the Government account within the prescribed time limit. (AY. 2020-21, 2021-22)