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Secondment reimbursements taxable as FTS – Delhi High Court July 10, 2026
Published in: Alerts
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The Delhi High Court, in CIT v. Ernst & Young U.S. LLP, has held that cost-to-cost salary reimbursements received by a foreign entity for seconded employees are taxable as Fees for Technical Services (FTS) under Article 12 of the India–USA DTAA where the ‘make available’ condition is satisfied.
Reversing the Tribunal’s view, the Court noted that the secondees retained their lien and employment benefits with EY US and were deputed to implement EY group policies, standards, and culture in India, amounting to a transfer of technical knowledge for future use. Relying on its earlier ruling in Centrica India Offshore, the Court reiterated that the substance of the arrangement prevails over labels such as “reimbursement” or “cost-to-cost,” and the absence of mark-up does not determine taxability.
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