TaxTMI 
TaxTMI 
2017 (9) TMI 1660
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....e assessee/appellant-company is running a hospital, namely, Escorts Heart Institute and Research Centre Ltd. at Jawarhar Lal Nehru Marg, Jaipur now known as Fortis Hospital and having its registered office at Okhla Road, New Delhi. The appellant entered into several agreements/contracts for running this hospital, such as agreement for providing medicines to in-patients, providing facilities for various treatments, cleaning, gardening, manpower at the hospital, etc. The hospital also engages doctors in the category of empanelled doctors and retainers in different specialities for providing expertise professional services. 4.1 The TDS survey was carried out in the appellant's case on August 13, 2008. During the post-survey proceedings, the assessee-appellant sub mitted details of its expenses and TDS deducted on the same, replies were filed with various details as and when required, which were placed on record and considered. 5. This court while admitting the appeals framed the following substantial questions of law : Appeal Nos. 8/2014 and 9/2014 admitted on May 28, 2014 "(i) Whether in the facts and circumstances of the case and in law the learned Income-tax Appella....
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..... 8. Insurance N.A. Professional indemnity insurance obtained by doctors on their own account @ pg. 135 9. ITR Remuneration treated as "Salary" by Doctors Remuneration treated as "Professional fee" by Doctors at pages 143 and 146 7. He has contended that the terms and conditions are quite distinguished and they can be got verified. He has taken us to the observations which are made by the authority which reads as under : "2. Payment to retainers 2.1 The assessee-deductor is employing doctors in the categories of empanelled doctors and retainers. The assessee is deducting TDS under section 194J of the Income-tax Act on account of payments made to these doctors. Relevant para of sample appointment letter in relation to retainer doctor is reproduced as under : 7. You shall not act in a similar, or any capacity, for any other com pany engaged in a business similar to that of the company. The conditions mentioned in the above appointment letters are the same for other retainers and empanelled doctors. The main features of appointment of an empanelled doctor are that he should be given consultation to out-patients and emergency patients....
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.... would indemnify the assessee against all lia bilities and hence there cannot be any employer-employee relation ship in this case. However, there exits no such indemnity clause in the present case. Further the assessee's contention is not acceptable as in the asses see's own case there are two categories of doctors, namely, empan elled doctors and retainer doctors, and from the terms of appointment letters mentioned above, it is evidently clear that the empanelled doc tors can take more than one assignment and have a revenue sharing formula and separate rules and conditions, while the retainers are having fixed monthly remuneration, cannot seek employment else where and are governed by the same rules and regulations as the other employee. Hence, in view of the discussion above, the pay ments made to retainer doctors are in the nature of salary on which TDS is deductible under section 192 of the Income-tax Act. 4.3.1 I have carefully considered the facts of the case and submis sions of learned authorised representative. On perusal of the relevant details/documents, I fully agree with the learned Assessing Officer in holding that the relationship between the appellant a....
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....ip of master and servant. The test of control is, again, not of universal application, and no standard can be issued with regard thereto. As such, the rule . . . greater the amount of con trol exercised over a person rendering service by the person contract ing them, the stronger the ground for holding it to be a contract of service, is again a general rule, which will have to be applied in the facts and in the circumstances of each case, and no standard with ref erence to the degree of control is possible to be laid down (source : Chaturvedi & Pithisaria's Income Tax Law, Fifth Edition, Vol. I pgs. 1142 to 1155). The remuneration of the judges of the hon'ble High Courts and the Supreme Court, as held by the hon'ble apex court in the case of Justice Deoki Nandan Agarwala v. Union of India [1999] 237 ITR 872 (SC) is assessable as salary income under section 15 of the Act and, accordingly, subject to TDS under section 192 of the Act. The hon'ble court held that though there is no employer, yet the payment received by the judges, who are constitutional functionaries, falls under the head 'Salary' being only a reward of employment. As such, even the existence of....
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....nch. It is further seen that the Assessing Officer has relied upon a decision of the hon'ble Supreme Court in the case of Justice Deoki Nandan Agarwala v. Union of India [1999] 237 ITR 872 (SC) wherein it has been held that although in the case of the Supreme Court and High Court judges, there is no employer-employee relationship, yet the payment received by them is in the head of salary as salary is a reward for employment. In my considered view, this ratio relied upon by the Assessing Officer goes in favour of the assessee because all the judges are issued Form16 and not Form 16A and returns filed accordingly by the judges. All the judges are entitled to retirement benefits, all the judges are entitled to employment benefits such as PF, HRA, LTA, transport and other applicable allowances. 15.1 Whereas the retainer doctors of the assessee-hospital on which the ratio of this decision has been made applicable were not getting any such benefits whatsoever and, therefore, this ratio rather goes in favour of the assessee's case. 16. I further noted that an employee-doctor is paid performance linked bonus whereas a consultant doctor is not paid any such bonus. There is no ....
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.... doctor employees on retainership basis and whether the TDS provisions sec tion 192 or 194J would apply on the payments made to them, as such. The brief facts of the issue are that the appellant, a super speciality hospital, apart from having certain doctors as regular employees, also has obtained services of other doctors in two manners, one way through the empanelment doctors and other are retainer doctors, both on contractual basis. The appellant has treated both types of doctors as consultant and deducted TDS under section 194J of the Act. However, in view of the fact that the retainer doctors, being paid fixed monthly amount and reporting to the HOD, having restriction on working affiliation with other hospitals and also subjected to the general rules and regulations of the appellant-hospital and the Assessing Officer formed the opinion that such doctors are similar to the regular employee of the appellant, therefore, the payment made to them falls under the category of salary income. Accordingly, the TDS deduction should have been made under section 192 of the Act then under section 194J of the Act, as followed by the assessee. On the other hand the learned authorised represe....
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....re the quality of medical services of the appellant. (iv) Accordingly, having such clause in the contract for the retainer doctor, does not convert from the status of the consultant into a regular employee of the appellant, as such. The last point raised by the Assessing Officer, in this regard, is that they are paid fixed monthly salary like the regular employee of the assessee. In this regard, I find force in the learned authorised representative's argu ment that had they been engaged as regular employees, then they would also be entitled for various other benefits/facilities, which are available only to the general salaried employees as such. This is an undisputed fact that the retainer doctor is not entitled for any sort of such benefits, therefore, for all practical purposes, they cannot be considered as a regular employee, as envisaged by the Assessing Officer. (v) It is also noted that unlike the regular employee, the retainers are engaged for a fixed period on temporary basis which may or may not be renewed as such. Similarly they are not entitled for other benefits like PF contribution, retirement benefits, life benefits, HRA, LTA, terminal compensation, etc., wh....
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....eady reference, I shall reproduce hereinbelow the agree ment with Dr. Anshu S.S. Kotia : May 7, 2007 Dr. Anshu S. S. Kotia E-41, Siddharth Nagar, Sector-13, Malviya Nagar, Jaipur 302017 Rajasthan. Dear Anshu, Sub : Services on Retainership basis As discussed and mutually agreed, we are pleased to engage your services as Consultant Anaesthesia for our Escorts Heart Institute and Research Centre Ltd., based at Jaipur, on the following terms and conditions : 1. This agreement shall initially be with effect from May 7, 2007 till September 30, 2009 and may be renewed, thereafter, on mutually agreeable terms. 2. You shall be providing clinical services in the department of anaesthesia, on a retainership basis, as may be required from time to time. 3. You shall be required to make your services available in accord ance with the demands of the job and the best interests of patients. 4. For the purpose of ensuring co-ordinated services, you shall be reporting to the HOD Anaesthesia or any other person nominated by the management. 5. In consideration of the services rendered by you, you shall be paid a consolidated retainership fee of Rs. 70,000 (....
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....ising out of or in connection with this arrangement. You are requested to return the duplicate copy of this letter in con firmation of your acceptance of the above terms and conditions. Looking forward to a mutually beneficial association. Yours faithfully, For Escorts Heart Institute and Research Centre Ltd." 7.2 Counsel for the appellant has taken us to the original cover note of premium for the risk of retainer or full time doctor (annexure-7) and the service conditions which are made for services on retrainership basis is on record of the appeal of memo the service conditions which are made for the appointment of the retainership which reads as under :- "Escorts Heart Institute and Research Centre Ltd. May 7, 2007 Dr. Anshu S. S. Kotia E-41, Siddharth Nagar, Sector 13, Jaipur-302017 (Raj.) Dear Anshu, Sub : Services on Retainership basis As discussed and mutually agreed, we are pleased to engage your services as Consultant-Anaesthesia for our Escorts Heart Institute and Research Centre Ltd., based at Jaipur, on the following terms and conditions : 1. This agreement shall initially be with effect from May 7, 2007 till September 30, 2009 and ma....
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....tion of one or more terms of this agreement or the regulations and policies of the company, or you neglect or fail or refuse to carry out the duties assigned to you here under, the company may terminate this agreement without notice and without any payment in lieu of notice. 13. You shall upon completion or termination of the engagement hereunder, immediately deliver up to the company all correspond ences, documents, papers and property belonging to the company which may be in your possession or under your control. 14. The Jaipur courts will have exclusive jurisdiction for any issue or dispute arising out of or in connection with this arrangement. You are requested to return the duplicate copy of this letter in con firmation of your acceptance of the above terms and conditions. Looking forward to a mutually beneficial association. Yours faithfully. For Escorts Heart Institute and Research Centre Ltd., Fortis Escorts Hospital May 18, 2007 To, Dr. Mohan B. Goyal, 29, Bhagat Vatika Civil Lines, Jaipur-302001 Rajasthan. Dear Dr. Mohan Sub : Services on retainership basis As discussed and mutually agreed, we are pleased to engage your serv....
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....or the regulations and policies of the company, or you neglect or fail or refuse to carry out the duties assigned to you here under, the company may terminate this agreement without notice and without any payment in lieu of notice. 12. You shall upon completion or termination of the engagement hereunder, immediately deliver up to company all correspondence, documents, papers and property belonging to the company which may be in your possession or under your control. You are requested to return the duplicate copy of this letter in con firmation of your acceptance of the above terms and conditions. Looking forward to a mutually beneficial association. Yours faithfully, Authorized signatory. I accept and confirm the above terms and condition. Fortis Escorts Hospital April 1, 2009 Mr. Murari Lal Sharma Vill-Kherli, Tarf Nooniya, Post Natoj, Kathumar, Alwar (Raj.) Sub : Appointment Dear Mr. Sharma We have pleasure in appointing you as staff nurse-nursing in Band V3 of the company, effective from April 1, 2009 on the following terms and conditions : 1. You will be entitled to a basic salary of Rs. 3,470 per month and other benefits as applicab....
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....d be liable for termination without any notice or compensation. Please confirm your acceptance of the appointment on the above terms and conditions by signing and returning a duplicate copy of this letter for our records. Yours faithfully, Authorized signatory. Escorts Heart Institute and Research Centre Ltd. July 14, 2007 To Dr. Deepak Yaduvanshi "Park View Vill" 156-A, Ashoka Enclave (Main) Sector-35, Faridabad, Delhi Mathura Highway. Sub :- Appointment Dear Dr. Deepak We have pleasure in appointing you as Assistant Consultant in our organization effective from July 14, 2007 on the following terms and conditions : 1. Placement and Compensation You will be placed in the appropriate band/responsibility level of the company, and will be entitled to compensation (salary and other applicable benefits) as detailed in annexure 'A'. Compensation will be governed by the rules of the company on the subject, as applicable and/or amended hereafter. 2. Salary revision Your salary will be reviewed on April 1st of 2008 and then April 1st each year, or at such other time as the management may decide. Sal ary revisions are discretionar....
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....es to be false or if you are found to have willfully sup pressed any material information, in such cases, you will be liable to removal from services without any notice. 9. Retirement The retirement age is 58 years. You will retire from the employ ment of the company at the end of the month in which you attain 58 years of age. 10. Termination of employment Either side may terminate this contract of employment by giving two months (60 days) notice in writing or salary, in lieu thereof and either party is not bound to give any reason thereof. Upon termination of employment you will immediately hand over to the company all correspondences, specifications, formulae, books, documents, market data, cost data, drawings, affects or records belonging to the company or relating to its business and shall not retain or make copies of these items. Upon termination of employment you will return all company property, which may be in your possession. 11. Medical Fitness This appointment is subject to your being, and remaining, medi cally fit. Please confirm your acceptance of the appointment on the above terms and conditions by signing and returning this letter for our r....
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.... establishing the control of service. A brief resume of the development of law in this point was necessary only for the purpose of showing that it would not be prudent to search for a formula in the nature of a single test for determining the vexed question. Relevant factors : 37. The control test and the organization test, therefore, are not the only factors which can be said to be decisive. With a view to elicit the answer, the court is required to consider several factors which would have a bearing on the result : (a) who is the appointing authority ; (b) who is the pay master ; (c) who can dismiss ; (d) how long alternative service lasts ; (e) the extent of control and supervision ; (f) the nature of the job, e.g. whether, it is professional or skilled work ; (g) nature of establishment ; (h) the right to reject. 38. With a view to find out reasonable solution in a problematic case of this nature, what is needed is an integrated approach meaning thereby integration of the relevant tests wherefor it may be necessary to examine as to whether the workman concerned was fully inte grated into the employer's concern meaning thereby independent of the concern although att....
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....erning atypical employments) has been the idea of 'mutuality of obligations' as a possible factor, i.e., whether the course of dealings between the parties demonstrates sufficient such mutuality for there to be an overall employment relationship.' (see also Ram Singh v. Union Territory, Chandigarh, MANU/SC/ 0893/2003 ; [2004] 1 SCC 126) 40. In Mersey Docks and Harbour Board v. Coggins and Griffith Liverpool Ltd. [1947] AC 1 (HL) Lord Porter pointed out : 'Many factors have a bearing on the result. Who is paymaster, who can dismiss, how long the alternative service lasts, what machinery is employed, have all to be kept in mind. The expressions used in any individual case must always be considered in regard to the subject- matter under discussion but amongst the many tests suggested I think that the most satisfactory, by which to ascertain who is the employer at any particular time is to ask who is entitled to tell the employee the way in which he is to do the work upon which he is engaged.' 41. If the provisions of the contract as a whole are inconsistent with its being a contract of service, it will be some other kind of contract and the person....
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....agent. It is not possible to lay down any precise rule of law to distinguish one kind of employment from the other. The nature of the particular business and the nature of the duties of the employee will require to be considered in each case in order to arrive at a conclusion as to whether the person employed is a servant or an agent. In each case the principle for ascertainment remains the same. Though an agent as such is not a servant, a servant is generally for some purposes his master's implied agent, the extent of the agency depending upon the duties or position of the servant, it is again true that a director of a company is not a servant but an agent inasmuch as the company cannot act in its own person but has only to act through directors who qua the company have the relationship of an agent to its capacity. Managing director may have a dual capacity. He may both be a director as well as an employee. It is therefore evident that in the capacity of a managing director he may be regarded as having not only the capacity as persona of a director but also has the persona of an employee or an agent depending upon the nature of his work and the terms of his employment. Wher....
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....rt observed that the duties of a doctor required that he performs supervisory functions in addition to treating the patients would mean which he had been employed in a supervisory capacity. Paragraph 12 of the judgment has some relevance and is extracted hereinbelow : 12. The aforesaid facts, in our opinion, clearly go to show that respondent No. 2 could not be regarded as a workman under section 2(s) of the Act as he was working in a supervisory capacity. While it is no doubt true that respondent No. 2, along with the other doctors, used to work in shifts nevertheless during the time when he was in the shift he was the sole person in-charge of the First-Aid Post. He had, under him male nurse, nursing attendant, sweeper and ambu lance driver who would naturally be taking directions and orders from the in-charge of the First-Aid Post. These persons obviously could not act on their own and had to function in the manner as directed by respondent No. 2, whenever he was on duty. They were, in other words, under the control and supervision of the respondent. When a doctor, like the respondent, discharges his duties of attending to the patients and, in addition thereto supervises th....
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....r clerical work. 11. We are of the view that a medical professional treating patients and diagnosing diseases cannot be held to be a 'workmen' within the meaning of section 2(s) of the Industrial Disputes Act. Doctors' profession is a noble profession and is mainly dedicated to serve the society, which demands professionalism and accountability. Distinction between occupation and profession is of paramount importance. An occupation is a principal activity related to job, work or calling that earns regular wages for a person and a profession, on the other hand, requires extensive training, study and mastery of the subject, whether it is teaching students, providing legal advice or treating patients or diagnosing diseases. Persons performing such functions cannot be seen as a workman within the meaning of section 2(s) of the Industrial Disputes Act. We are of the view that the prin ciple laid down by this court in A. Sundarambal's case (supra) and in Muir Mills's case (supra) squarely applies to such professionals. That being the factual and legal position, we find no reasons to interfere with the judgment of the High Court. The SLP lacks merit and is dis misse....
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....ervice' in the exclu sionary part of section 2(1)(o) must, therefore, be construed as excluding the services rendered by an employee to his employer under the contract of personal service from the ambit of the expres sion 'service'. It is no doubt true that the relationship between a medical prac titioner and a patient carries within its certain degree of mutual con fidence and trust and, therefore, the services rendered by the medical practitioner can be regarded as services of personal nature but since there is no relationship of master and servant between the doctor and the patient the contract between the medical practitioner and his patient cannot be treated as a contract of personal service but is a contract for services and the service rendered by the medical practi tioner to his patient under such a contract is not covered by the exclu sionary part of the definition of 'service' contained in section 2(1)(o) of the Act." 8.5 In CIT (TDS) v. Apollo Hospitals International Ltd. [2013] 359 ITR 78 (Guj) wherein the Gujarat High Court held as under (page 80) : "From the facts on record it emerged that the assessee-hospital had engaged 53 full-time res....
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....no dispute. In relation to other category of doctors there was a dispute. The Assessing Officer and the Commissioner of Income-tax (Appeals) concluded that though these categories of doctors had a fixed remu neration and variable pay but their terms and conditions of employ ment or service would be crucial and material. In relation to two doc tors, namely, Dr. Zirpe and Dr Phadke, the contracts were taken as sample and scrutinized minutely. Upon such a scrutiny the Tribunal noted that it cannot be said that these doctors were employees. If the first part of the Commissioner's order indicates as to how these per sons or doctors were not treated by the assessee as regular employees for want of benefits like provident fund, retiremental benefit, etc., then, merely because they are required to spend certain fixed time at the hospital, treating fixed number of patients at the hospital, attend them as out patients and indoor patients does not mean that an employer-employee relationship can be culled out or inferred. We do not see how Mr. Gupta can fault such conclusions by relying upon decisions which have been rendered in cases of doctors having a fixed pay and tenure. In that ca....
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....umber of hours the doctors have to be at Ruby Hall Clinic means they will not be entitled to visit any other hospital or attend patients at it necessarily. The anxiety appears is not to inconvenience the patients visiting and seeking treatment at the Ruby Hall Clinic. If specialized team of doctors, experts and expe rienced in the field are part of the assessee's clinic, then, their avail ability at the clinic has to be ensured. Now, the trend is to provide all facilities under one roof so that patients are not compelled to go to several clinics or hospitals. Hence, a diagnostic center with laborato ries and clinics, consultation rooms, rooms with beds for indoor treat ment, critical care, treatment for kidney, liver, heart, brain, stomach ailments are facilities available at clinics and hospitals. The manage ment, therefore, insists that such facilities, which are very costly and expensive are utilized to the optimum and the investment of time, money and infrastructure is not wasted. Hence, fixed timings and required number of hours and such stipulations are incorporated in contracts so that they are of binding nature. The doctor or expert medical practitioner is then obliged ....
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....iples. The Tribunal was right in reversing the findings of the Assessing Officer and the Commissioner of Income-tax (Appeals). There was a clear perversity and contradic tion in the findings, particularly pointed out by us hereinabove. In relation to other doctors where the remuneration was variable and there was a written contract or no written contract the Commis sioner of Income-tax (Appeals) and the Tribunal did not commit any error at all. Both have referred extensively to the materials on record. We are not in agreement with Mr. Gupta that the Tribunal's order is in any way incomplete or sketchy or cryptic. The settled principles and rendered in Co-ordinate Bench decisions have been referred only to emphasize the tests which have been evolved from time to time. It is only in the light of such tests and their applicability to individual cases that matters of this nature must be decided. This approach of the Tribunal did not require it to render elaborate or lengthy findings and when it agreed with the Commissioner of Income-tax (Appeals). We do not find even in the case of Dr. Sumit Basu the Commissioner of Income-tax (Appeals) or the Tribunal committed any error. Merel....
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....ees or there can never be master servant relation ship. This is apprehended by the Revenue because several eminent professionals are rendering full time services as medical officers, medi cal practitioners and teachers at Civil and Government hospitals. They are also part of hospitals, privately managed or managed in public pri vate partnership (PPP). Our findings or the Tribunal's order being upheld does not mean that we have laid down any absolute rule or principle of general application. In such cases, depending upon the attending facts and circumstances, the terms and conditions of the engagement, a finding can be arrived at that there is a master servant or an employer-employee relationship. It can be arrived at in cases where it is found by the Income-tax authorities that though there is not a regular process of recruitment and appointment but the contract would indicate that the doctor/professional was appointed as an employee and on regular basis. All such and other courses in law are always open. With this additional clarification, we dismiss this appeal." 8.7 In CIT (TDS) v. IVY Health Life Sciences P. Ltd. [2016] 380 ITR 242 (P&H), the Punjab and Haryana High Cour....
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....e hospital and he is given a receipt for it and then he consults the doctor to whom he wants to consult. The concerned doctor prescribes the treatment on the hos pital's letter pad. If the patient is to be admitted in the hospital for the indoor treatment, then he is admitted under his treatment. The work ing days and hours of the doctors working in the OPD of the hospital are fixed and as per the contract between these doctors and the hos pital they are not allowed to do their own practice or work with another hospital during the period for which they are engaged attended the hospital on call. However, during the course of TDS inspection, it was noticed that the assessee-deductor was deducting the tax at source of the both types doctors under section 194J as pro fessional charges, whereas the payments made to the doctors who are regularly attached with the hospital, are required to be treated as sal ary and tax is also required to be deducted under section 192 of the Act. The Assessing Officer was of the view that the payments made to the doctors who were regularly attached with the hospital, were required to be treated as salary and taxes are required to be deducted under sec....
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....A bare perusal of the case law relied upon by the appellant and submissions made in the synopsis reveals that there does not exist employer-employee relationship between the assessee-appellant and the persons providing professional services. On consideration of the agreement in its entirety vis-a-vis the case law relied upon by the assessee-appellant, it is evident that it is not a case of employer- employee relationship between the assessee-appellant and the doc tors. Therefore, having regard to the detailed analysis and findings of the Commissioner of Income-tax (Appeals) on the issue in question, it cannot be said that the findings of the learned Commissioner of Income-tax (Appeals) suffer from any infirmity. In view of this, find ings of the Commissioner of Income-tax (Appeals) are upheld.' Additionally, we may notice the terms of the agreement on the basis of which the Assessing Officer had issued a show-cause notice to the assessee which read thus : '(i) The second party shall be associated exclusively with M/s. Ivy Hospital as full-time consultant and shall not associate himself with any other hospital. (ii) The second party shall be paid professional charge....
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....he relationship of employer and employee we have to examine whether the contract entered into between the parties is a 'contract for service' or a 'contract of service'. There are multi-factor tests to decide this question. Independence test, control test, inten tion test are some of the tests normally adopted to distinguish between 'contract for service' and 'contract of service'. Finally, it depends on the provisions of the contract. Intention also plays a role in deciding the factor of contract. The intention of the parties can also determine or alter a contract from its original shape and status if both parties have mutual agreement. In the instant case, the terms of con tract ipso facto proves that the contract between the assessee-com pany and the doctors is of 'contract for service' not a 'contract of service'. The remuneration paid to the doctors depends on the treat ment to the patients. If the number of patients is more, remuneration would be on a higher side or if no patients, no remuneration. The income of the doctors varies, depending on the patients and their treatment. All these factors establish that there is no relati....
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....rn of income for the relevant assessment years showing the income received from the assessee-company as professional income and the same is said to have been accepted by the Department. The High Court of Gujarat, in the case of CIT (TDS) v. Apollo Hospitals International Ltd. reported in [2013] 359 ITR 78 (Guj) has taken a similar view that the consultant doctors were not getting sal ary, but the payment to them was in the nature of professional fees liable to deduction under section 194G and section 192 of the Act had no application. We are in agreement with the findings of the Tribunal on this issue. Accordingly, we answer the first substantial question of law in favour of the assessee and against the Revenue." 8.9 In CIT (TDS) v. Teleradiology Solutions P. Ltd. [2016] 67 tax mann.com 346 (Karn), it has been held as under : "3. It appears after the order of Assessment Officer when the mat ter was carried before the Commissioner of Income-tax (Appeals) at paragraph-5, after considering the earlier decision of the Tribunal in the case of ITO v. Elbit Diagnostics Ltd. [IT Appeal Nos. 500 to 504 (Bang.) of 2008, dated November 26, 2008] the following comparative chart in ....
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....reappreciate the facts or substitute its own appreciation when appreciation of facts of both the authorities below was found to be rational and possible on given fact. The appreciation reached by both the authorities below has to be accepted by this court. On the given facts, this court can only examine whether the law has been applied properly or not. On a careful reading of the impugned judgment and order, we are of the view that the law has been correctly applied. Therefore, we do not find any question of law involved in this matter." 9. The counsel for the respondent Mr. Mathur has taken us to the view taken by the Tribunal in majority and contended that the said view is required to be accepted considering that "salary" and "wages" are defined under section 17 of the Income-tax Act and section 2(vi) of Payment of Wages Act provides as under : Section 17 of the Income-tax Act "17. 'Salary', 'perquisite' and 'profits in lieu of salary' defined.- For the purposes of sections 15 and 16 and of this section,- (1) 'salary' includes- (i) wages ; (ii) any annuity or pension ; (iii) any gratuity ; (iv) any fees, commissions, perquis....
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....sistance or other amenity or any service excluded from the computation of wages by a general or special order of (the appropriate Government) ; (3) any contribution paid by the employer to any pension or pro vident fund, and the interest which may have accrued thereon ; (4) any travelling allowance or the value of any travelling con cession ; (5) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment ; or (6) any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d)." 9.1 He relied upon the decision of the Supreme Court in Justice Deoki Nandan Agarwala v. Union of India [1999] 237 ITR 872 (SC) wherein it has been held as under (page 874) : "There can be no doubt that prior to the said amendment Parlia ment could not have legislated on judges salaries, but it is a far cry to conclude therefrom that the salary of a judge is not taxable under the Income-tax Act. The subject of the salary of a High Court and Supreme Court judge and the subject of tax on income are altogether different and the conclusion that is sought to be drawn is quite unac ceptable. The salary....
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....ason stated in the letter. Was the Government right in the view it took, is the question here. The learned single judge of the High Court quashed the commu nication refusing to accord approval and directed the Government to reconsider the application of the respondent. There was a letters patent appeal before the Division Bench of the High Court. The Division Bench found no reason to interfere with the view expressed by the learned single judge and accordingly the appeal was dismissed. Aggrieved thereby the appellant who was the respondent before the trial court has come up to this court. We are concerned in this appeal with the construction of section 80RRA of the Act. The said section is as follows : '80RRA. (1) Where the gross total income of an individual who is a citizen of India includes any remuneration received by him in foreign currency from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the individual, a deduction from such remuneration of an amount equal to fifty per cen....
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....was received from 'any employer'. The other requirement is that the sum should be received for the services rendered outside India. There is no dispute as to that. The only question that requires consideration in the background of indisputable facts in this case is whether the sum received by the respondent was from 'an employer'. In other words, whether the Thai company was the employer of the respond ent. On behalf of the Revenue it was submitted by Mr. Ahuja that it was only as a counterpart of section 10(6)(vii) and that the section should be so considered properly. Mr. Palkhiwala appearing for the respondent pointed out the object of section 80RRA of the Act was manifestly to encourage, firstly earning of foreign exchange by India, secondly, bringing that currency by Indian nationals from abroad to India and thirdly, to improve the status of the Indians abroad and increasing the market of Indian technician. It appears to us to be plausible object in the present socio-economic context. We find that the amplitude of the expressions 'employee' and 'employer' covers the cases of consultant or technician. We find in the scheme of the section nothing ....
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.... any technician or consultant employed abroad for the period stipulated in the section. We find that there is no warrant in the section to restrain the expression 'remuneration' received from a foreign employee only to the salary received by an employee. In our opinion, employment as a technician for the purpose indicated by Shri Palkhiwala could also be an object of the Act and in such a case the fee received by con sultant or technician would also come within the purview of the sec tion concerned. In Aiyar 'The Lexicon 1940 Ed. at page 387 it has been stated that an employer is one who employs, one who engages or keeps men in service, one who uses or enjoys the service of other persons for pay or salary. The words 'employer' or 'employee' are used not in any technical sense. In Chintaman Rao v. State of Madhya Pradesh [1958] SCR 1340 ; AIR 1958 SC 388, it was observed that the concept of employment involved three ingredients : (1) employer (2) employee and (3) the contract of employment. The employee is one who works for other for hire. The employer is one who employs the services of other persons. In the context of this act, therefore, the expressi....
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....ing is clear, we need not bother any more about the intention or the purpose. The intention, in our opinion, is writ large. In principle also we are unable to find any rationale or the reason for the distinction sought to be made on behalf of the Revenue." 9.3 He has also relied upon the decision of the Authority for Advance Rulings reported in Max Mueller Bhavan, In re [2004] 268 ITR 31 (AAR) ; [2004] 190 CTR (ARR) 450 wherein it has been held as under (page 34) : "In Chandi Prasad Singh v. State of U.P., MANU/SC/0034/1955 ; [1956] AIR 1956 SC 149, the hon'ble Supreme Court pointed out (page 153) : 'The distinction between the two (servant and agent) is thus stated in Halsbury's Laws of England, Volume 22, page 113, para 192 : "A servant acts under the direct control and supervision of the master, and is bound to conform to all reasonable orders given to him in the course of his work . . . An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal"'. The test to ascertain whet....
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.... under the head 'Salaries' shall, at the time of pay ment, deduct Income-tax on the amount payable at the average rate of Income-tax computed on the basis of the rates in force in the finan cial year in which the payment is made, on the estimated income of the assessee under this head for that financial year. Where a person is employed simultaneously under more than one employer, sub-sec tion (2) of section 192 is attracted. It provides that where, during the financial year, an assessee is employed simultaneously under more than one employer, or where he has held successively employments under more than one employer, he has to furnish particulars to the person responsible for making the payment being one of the said employers at the choice of the employee, such details of income under the head 'Salaries' due or received by him from other employer/employers ; and the tax deducted at source therefrom in the prescribed form and thereupon the employer to whom the aforesaid particulars are furnished shall take into account the details so fur nished for the purposes of making deduction as postulated in sub- section (1) thereof." 9.4 He contended that the view taken by ....