India: Salaries of seconded employees; extension of time for reassessment notices; tax residency certificates

The KPMG member firm in India prepared reports about three recent tax-related court decisions (read more at the hyperlinks provided below).

• Reimbursement of salaries of seconded employees not taxable as fees for technical services (FTS): The Bengarulu Bench of the Income-tax Appellate Tribunal held that amounts received by the taxpayer, a U.S. company, as reimbursement for the salaries of its employees who were seconded to its Indian subsidiary, were not properly treated as FTS under the Income Tax Act, 1961, or fees for included services (FIS) under the United States-India income tax treaty. The tribunal observed that the employees were working solely under the control and supervision of the Indian company, the taxpayer’s role was merely to facilitate payment of salaries on behalf of the Indian company, and the India company had duly deducted tax at source on the salaries paid to the seconded employees. The case is:  Google LLC v. JCIT. Read a March 2023 report [PDF 419 KB]
  
  
• Extension of time limit under old reassessment regime does not apply under new reassessment regime: The Allahabad High Court held that reassessment notices issued after 31 March 2021 under the new reassessment regime were time-barred because the maximum limitation period of six years under the old regime to reopen the reassessment had expired. The court determined that the extension of time to issue reassessment notices under the old reassessment regime to 30 June 2021 did not apply to reassessment notices issued under the new reassessment regime. The case is: Rajeev Bansal and Others v. Union of India. Read a March 2023 report [PDF 295 KB]
  
  
• Singaporean company eligible to claim income tax treaty benefits on basis of valid tax residency certificate (TRC): The Delhi Bench of the Income-tax Appellate Tribunal held that the taxpayer, a Singaporean company, was entitled to claim benefits under the Singapore-India income tax treaty on capital gains recognized from the sale of shares in an Indian company because the taxpayer had furnished a valid TRC issued by Singaporean tax authorities. The case is: Reverse Age Health Services Pte Ltd. v. DCIT. Read a February 2023 report [PDF 410 KB]