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2019 (4) TMI 1042 - HC - Income TaxTDS u/s 195 - disallowance u/s 40(a)(ia) - secondment of employees - Fees for Technical Services u/s 9(1)(vii) - Income from salary OR income from contract of services - HELD THAT:- The contract between the assessee and the Kuwait based company envisaged payment of deputation charges which were quantified at US $ 5500 per month. Such amount would be paid to the assessee. Out of such amount the assessee would remunerate the employee. The mode of payment was also specified. In clear terms, thus the concerned employee was in the employment of the assessee and not of the US based company contrary to what the department contends. The test of the extent of control and supervision of a person by the engaging agency are undoubtedly relevant factors while judging the question whether the person was an agent or an employee. However, in a situation where the person employed by one employer is either deputed to another or is sent on loan service, the question of dual control would always arise. In such circumstances, the mere test of onspot control or supervision in order to decide the correct employer may not succeed. It is inevitable that in a case as the present one, the Kuwait based company would enjoy considerable supervising powers and control over the employee as along as the employee is working for it. Neverthless, the assessee company continued to enjoy the employer emplyee relationship with the said person. For example, if the work of such person was found to be wanting or if there was any complaint against him, as per the agreement, it would only be the assessee who could terminate the service. ITAT was correct in giving a finding that the impugned income is income from salary instead of income from contract of services as held in the assessment order.
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