The Guiding Factor as to the taxability under the head ‘Salaries’ Vs ‘Fees For Technical Services’ – Expatriate Taxation Regarding:
The question is whether the services rendered by the overseas entity will be taxable under Fees For Technical Services in the hands of the overseas entity or whether they are taxable as ‘Salaries’ in the hands of the non-resident employees?
Held that, where the Indian entity only had the right to terminate the secondment, without the right to terminate the original employment, overseas entity was the real employer of seconded employees. Reimbursement of salary was to be regarded as FTS [Fees for Technical Services] as they rendered quality control services till the necessary skills were acquired by the resident employee group. [Centrica India Offshore P Ltd Vs CIT]  [44 Taxmann.com 300] [Delhi]