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

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 “Re: Reimbursement of salary and other related costs by Owens Corning (India) Pvt Ltd (OCIPL) to the Appellant treated as "Fees for Technical Services".

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.

Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 Re.: Levy of interest under section 234B of the Income-tax Act, 1961:

1. 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 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 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 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 Page | 5 Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 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 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.

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; Page | 8 Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 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.

In the 1st round of assessment proceedings, the assessee was asked to 8. 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.

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 Page | 11 Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 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

Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022

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/- Page | 14 Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 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 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.

Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 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 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).

Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 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, Page | 21 Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 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......

Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022 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.

Owens Corning Insulating Systems Canada LP ITA no.461/Mum./2022