It is quite common for foreign companies to depute their experts in India in order to provide various kinds of technical services to their Indian partners. In many cases, deputation of technical experts in India is a part of the process of providing technical services. 
 
Therefore, in a number of cases, the various courts have held that the reimbursement of payment made to technical personnel, payment of living allowance and payment of travelling charges of a foreign company's employees would partake the character of fees for technical services because such payments would be part and parcel in the process of advice/services of a technical nature. 
 
The above view has recently been supported by the Authority for Advance Rulings in the AT&S India Pvt Ltd case. 
 
In the said case, an Austrian company undertook to provide the services of qualified technical personnel employed by it to an Indian company. The salary, bonus and other benefits of the employees were paid by the Austrian company. The Indian company had to reimburse the cost incurred on such employees by the Austrian company. 
 
The issue raised before the Authority was whether the reimbursement cost paid by the Indian company to the Austrian company would be taxable in hands of the Austrian company. The Authority held that the term "fees for technical services", as defined in the Double Taxation Avoidance Agreement, meant payment of any amount to any person other than payments to an employee of a person making payments in consideration for the services of a managerial, technical or consultancy nature. It was, therefore, held that such reimbursement would be in the nature of "fees for technical services" liable to tax in India. 
 
A different view has, however, been taken by some other courts which have held that reimbursement of actual expenses will not amount to payment for technical services. 
 
The controversy was tried to be resolved by the Delhi Tribunal in case of HCL Info System Ltd. It was held that reimbursement of the salary of employees deputed to work in India would not be liable to tax in India as fees for technical services. Such employees would only be subject to tax in India on their salary income. 
 
The aforesaid issue was taken to the high court also. The Delhi High Court held that the technicians were deputed and the services were placed at the disposal of the Indian company. The reimbursement made by the Indian company to the foreign company for the cost of salary etc. paid by the foreign company to its employees could not be regarded as "fees for technical services." 
 
Unfortunately, the Delhi High Court's decision reported in 274 ITR 262 and Bombay High Court's decision reported in 245 ITR 823 were not brought to the notice of Authority for Advance Rulings in AT&S India's case. 
 
It appears that where the foreign company merely deputes its personnel to work under the direct supervision and control of the Indian party and does not undertake to render any service through them, then the payment towards reimbursement of salary etc. could not be held as "fees for technical services."

H P Aggarwal