TaxTMI 
TaxTMI 
2016 (6) TMI 296
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.... the persons recruited by her treating such payments as not in the nature of salary. It is the contention of the assessee that the payments were made towards salary to the employees who are all non-residents and therefore the provisions of Sec. 195 have no application for the salary payments. However, the Assessing Officer held that the amount debited under the head "salaries" to the persons recruited abroad are not in the nature of salaries and disallowed u/s. 40(a)(ia) of the Act since no TDS was made at source. 4. On appeal, the Ld. CIT(A) deleted the disallowance holding that the payments made by the assessee were towards salaries to her employees who are all non-residents and the provisions of Sec. 195 have no application. He also held that the provisions of Sec. 192 also have no application since the salaries paid by the assessee to the employees abroad are not liable to be chargeable to tax in India. 5. Against this decision, Revenue is in appeal before us. The Ld. Departmental Representative vehemently supports the orders of the Assessing Officer in invoking the provisions of Sec. 40(a)(ia) of the Act for non-deduction of TDS on the salaries paid by the assessee to it....
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.... It was submitted that greater the degree of control exercised over the person employed, conclusion would be in favour of employer / employee relationship. In the case of persons working on sites abroad of foreign clients it was submitted that i) The appointment is by the assessee. ii) The supervision of the assessee is through supervisor and consultant. iii) The working hours, salary overtime. leave increment, health / personal accident insurance, bocking, rescheduling / cancellation of air tickets, giving advance in the event of contingencies and other welfare measures are implemented by the assessee. iv)The power to settle disputes, to terminate services of the employees vests with assessee solely. 2) ln addition to various evidences laid in support of abovestated contention of employer-employee relationship, it is proposed to submit further evidence as under: i) Copy of license issued by Ministry of Labour/ Overseas Indian Affairs Pursuant to which the entire business of the assessee is carried out is market as Annexure-I. The attention of learned CIT(A) is drawn to clauses of the License. ii) The....
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....ct entered by appellant with individuals deployed for the job abroad. I have gone through the same. A reading of the first one makes it clear that the appellant entered into contract with TEC-FIRM on one side, on behalf of joint venture and the appellant. The appellant then entered into contract with individuals upon the TEC's request made, governed by the technical service "BLANKET CONTRACT" entered into TEC and the appellant. As per that, the individual technical service contract was entered to supply the manpower to carry out the project of - TEC in the joint venture. This makes it clear that the appellant as well as TEC both were required to enter individual service contract with these persons who are to be deployed for the job on the site of the project. The technical service contract between appellant and individual then makes it clear that what appellant has contracted is services of the qualified and skilled personnels as per which they are required to work 60 hours a week for 25 months on provisional basis. This contract also provides that accommodation and meal will be free of cost and then sick leave of maximum 12 days in a year and home leave for 15 days will be ava....
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....some permanent records at her place of business. It shows that power of recruitment and dismissal rests with appellant firm only. I have also gone through Sec. 195 which is reproduced as under: "195. (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest {***} or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries" shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct Income-tax thereon at the rate in force:" 3.5 Since sec. 195 does not take salary in its purview application of Sec.195 in the case is not tenable. The appellant in the submission has made an alternative submission also and i.e. as all the persons are working outside India to whom remunerations were paid from the bank account of the assessee situated outside India, neither section 192 nor section 195 are applicable as the income is not accruing or arising in India as per the provision of Section 9(1). Appellant has also stated that as p....