TaxTMI 
TaxTMI 
2004 (5) TMI 61
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....ax Act institute is liable to deduct tax at source from payments made to honorary Teachers. * If answer to above is yes, then under which section. 2. The Goethe Institute Germany is a society registered in Munich Germany. In 1968 the applicant, Max Mueller Bhawan, was set up as a Cultural Institute in India as a branch of the said society which is under the control of the Govt.of Federal Republic of Germany. One of its functions is to teach German language in which preliminary and advance courses are being conducted by full time teachers. From April 1, 2003 the applicant has proposed to engage honorary part time teachers on contract basis to take classes in German Language during a semester and for that purpose a panel of teachers is main....
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....m the amounts payable to the part time teachers by the applicant. 4. Mr. Mukesh Malik, who represented the applicant, argued that the scheme of Tax deducted at source had no application to the part time teachers of German language as no relationship of employer and employee existed and the teachers would not also fall within the definition of professional services in section 194J of the Act. Mr. Abidi, Addl. Commissioner appearing for the department, submitted that the honorarium paid to the part time teachers was nothing but salary and relation of employer and employee existed between the applicant and the teachers, therefore, section 192 would apply. 5. The short question that falls for consideration is whether on the facts and in the c....
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....t is a person subject to the command of his master as to the manner in which he shall do his work…… An independent contractor is one who undertakes to produce a given result but so that in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified beforehand……….Clerk & Lindsell on Torts (Edn.11) at p. 135 have adopted the description of an independent contractor given by Pollock as quoted above. In Edn. 11 of Salmond's Treatise on the Law of Torts, the same distinction has been clearly indicated in the following passage at p. 98: "What then, is the test of this distinction between a servant and an independent contractor? The test....
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...., of Industrial Disputes Act, 1947. Speaking for the bench of four learned Judges, Bhagwati J observed, "The prima facie test for the determination of relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work. The nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature incapable of precise definition. The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due con....
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....urt is apposite: "A servant acts under the direct control and supervision of his master. An agent, on the other hand, in the exercise of his work is not subject to the direct control or supervision of the principal, though he is bound to exercise his authority in accordance with all lawful orders and instructions which may be given to him from time to time by his principal. But this test is not universal in its application and does not determine in every case, having regard to the nature of employment, that he is a servant". 9. From the above discussion, it is clear that in the case of contract of service, the employer not only orders/requires what is to be done but also directs as to how it shall be done, whereas in contract for service,....
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....mitilate against the relationship of Master and servant between the applicant and the teacher, once the aforementioned test is satisfied. 11. Chapter 17 of the Act embodies provisions for collection and recovery of tax by various methods like deduction at source, collection at source, advance payment of tax, collection and recovery. Section 192 which is contained in the said chapter enjoins deduction of tax at source (referred to in this ruling as TDS) in case of income of the payee being chargeable under the head "salaries". Sub-section (1) of section 192 enjoins that any person responsible for paying any income chargeable under the head "salaries" shall, at the time of payment, deduct income-tax on the amount payable at the average rate ....