Case Law Analysis
|Income Tax Appellate Tribunal
Economic Employer Test | TDS Liability on Seconded Staff Requires Deduction Under Section 195; Reimbursement Not Automatic Exemption : ITAT Bangalore
The ITAT Bangalore ruled that reimbursement of salaries to group companies for seconded employees triggers TDS obligations under Section 195 if the Indian entity functions as the economic employer, regardless of cost-to-cost accounting. This clarifies that inter-company cost recovery does not override the substance-over-form principle in cross-border secondments, impacting multinational corporations with shared staffing models.