Secondment of employees: Formation of Permanent Establishment in India.
- The employees were seconded to Teradata India under a secondment agreement under which those employees worked as employees of the Indian company.
- The seconded employees worked under the control and supervision of ‘Teradata India’.
- The salary of seconded employees was disbursed by the Assessee in their home country-USA for administrative convenience.
- The Assessing Officer was of the view that the seconded employees rendered services on behalf of the Assessee in India, which constituted a service Permanent Establishment in India.
- The Tribunal placed reliance on the decision laid down in the case of Centrica offshore Pvt Ltd., wherein the High Court confirmed the existence of Permanent Establishment in case of secondment of employees based on the facts of the case and the agreement executed between the Indian Company and the non-resident company.
- In the instant case, the employees of the Assessee were deputed to manage the affairs of the Indian entity and provided technical knowledge.
- The employees though worked at the premises of the Teradata India, but for all practical purposes, they remained employees of the Assessee Company. The employees continued to make their social security contributions in the USA and their salaries were also distributed to their bank accounts in the USA.
- In the case of Centrica (supra), there was an agreement between the Indian entity and expatriate, but in the present case, there was no such agreement.
- Thus, in view of the above facts, following the findings of the Hon’ble High Court in case of Centrica, the Tribunal upheld the finding of the lower authorities on the issue of the existence of Permanent Establishment of the Assessee Company in India in terms of the tax treaty.