IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D” NEW DELHI BEFORE SHRI YOGESH KUMAR US, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER आ.अ.स/ं .I.T.A No.2055/Del/2025 िनधा(cid:6981)रणवष(cid:6981)/Assessment Year: 2022-23 ADVICS CO. LTD., बनाम THE OFFICE OF THE DEPUTY C/o ADVICS CO. LTD. Vs. COMMISSIONER OF INCOME Plot No.7, 8 & 9, Sector-30B, TAX, Circle 1(1)(1), IMT Rohtak, HARYANA 124001. Civic Centre, Minto Road, PAN No.AAICA7015J New Delhi 110002.

अपीलाथ(cid:7278) Appellant (cid:7079)(cid:7004)यथ(cid:7278)/Respondent Assessee by Shri K.M. Gupta, Advocate & Shri Harmeet Singh, CA Revenue by Shri M.S. Nethrapal, CIT DR सुनवाईक(cid:7409)तारीख/ Date of hearing: 06.04.2026 उ(cid:7363)ोषणाक(cid:7409)तारीख/Pronouncement on 22.04.2026 आदेश /O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER:

1. This appeal arises from Ld. AO’s order dated 23.01.2025, passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereafter as “the Act”). This order itself has been passed incorporating the directions issued by the Dispute Resolution Panel-1 (hereafter as “DRP”), dated 10.12.2024. In this case, the assessee is incorporated under the laws of Japan and is a tax resident thereon. The main issue pertains to the reimbursement of expenses pursuant to secondment of employees being treated as Fees for Technical Services (FTS) by the Ld. AO.

1.1 Though the assessee has filed the present appeal with three grounds but ground no.2 is the substantive ground. The same is extracted as under: -

“2. Addition of INR 1.03.55.809 on account of employee cost reimbursement taxable as Fees for Technical Services ('FTS')

The lower authorities erred in net appreciating that there exists employee-employer relationship between expatriates and the Indian Company i.e. Advics India Private Limited ['Advics India' or 'Indian Associated Enterprises (AE)) and thus no service is rendered by the Appellant to Indian AE.

2.1. The lower authorities erred in ignoring and not taking cognizance of documents submitted to substantiate the existence of employer-employees relationship between Indian AE and the expatriates which inter-alia included the employment contract entered into between the Indian AE and expatriates and thereby, erroneously concluding that no independent employment agreement was entered into between them.

2.2. The lower authorities erred in not appreciating the fact that the Appellant has not performed any specific function apart from transfer of personnel in order to support the Iulian Al and thus there could be no FTS is absence of any service being rendered.

2.3. The lower authorities erred in not appreciating the fact that the reimbursement amount is in the nature of salary which is not taxable as FTS as per the provisions of section 9(1)(vil) of the Act and PTS under Article 12 of India-Japan Covered Tax Agreement (‘CTA’).

2.4. The lower authorities erred in not appreciating the fact that the Indian All have withheld taxes under section 192 of the Act on the entire salary paid to the expats and such expatriates as evidenced by Form 16 issued to the expatriates and such expatriates have offered the entire income to taxes in its return of income filed under the Act.

2.5. The lower authorities erred in not appreciating the fact that the payments by the Indian All to the Appellant are towards pure reimbursement of actual employee cost and does not have any element of Income.”

2. Right at the outset, the Ld. AR drew our attention to the facts that in the assessee’s own case for AY 2017-18 this issue has been decided in favour through order dated 12.04.2024 [165 taxmann.com 716 (Delhi – Trib.)]. Additionally, the Ld. AR mentioned the facts indicating that the impugned reimbursement is not FTS, as under:

i. Existence of employers and employee relationship between the expatriates and the Indian Company, leading to the conclusion that no services were rendered by the assessee;

ii. There is no service element in the secondment of employees;

iii. There is no FTS