Toshiba Corporation vs. The Deputy Commissioner of Income Tax

Parties Involved

Facts Summary

The assessee, Toshiba Corporation, a tax resident of Japan, is engaged in manufacturing and marketing various products. During the relevant period, the assessee received reimbursements amounting to Rs.10,76,36,392/- in respect of salaries paid in Japan to employees of its Indian entities. These payments were made for administrative convenience. The assessee provided detailed documentation to show that the reimbursements were for seconded employees working under the control and supervision of Indian entities. The Assessing Officer (AO) treated these reimbursements as Fee for Technical Services (FTS) under section 9(1)(vii) of the Income Tax Act, 1961, and Article 12(4) of the India-Japan Double Taxation Avoidance Agreement (DTAA). The assessee contested this, arguing that the payments were reimbursements of salary and not FTS.…

Legal Issues

• 1. Whether the payments made by the Indian entities to the assessee in respect of salaries paid to the seconded employees in Japan are in the nature of reimbursement of the salary for the services rendered in India or are in the nature of FTS?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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