TMI Blog1986 (4) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-5-1979 sent by him. The assessee applied to the ITO and got a tax clearance certificate for remitting the amount to Mr. Clark. The assessee undertook to be treated as an agent of non-resident Mr. Clark under section 163 of the Income-tax Act, 1961 ('the Act'). After obtaining the permission of the Reserve Bank, the assessee remitted pound 6,719 to Mr. Clark and the balance could not be remitted as there was some objection from the Reserve Bank. The ITO required the assessee to submit a return of income of the non-resident as the assessee was treated as a statutory agent. The assessee filed a return claiming that the payment made to Mr. Clark was exempt under section 10(6)(vi) of the Act. The ITO did not accept the assessee's plea that Mr. Clark received the amount as employee of a foreign enterprise for services rendered by him in India. Mr. Clark is a consulting engineer who stays in England. He does not become the employee of any foreign enterprise and he did not receive the amount as an employee of that foreign enterprise. Thus, the remuneration received by Mr. Clark from the assessee is not covered by the exemption under section 10(6)(vi). In the absence of full details with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot of the matter. Since there was some delay in obtaining the said certificate from the West German company it could not be filed before the ITO. Thus, there was sufficient reason for producing it before the Commissioner (Appeals) which he should have admitted. He submitted that the said certificate should be accepted and Mr. Clark should be considered as an employee. He strongly urged that since Mr. Clark was an employee of the West German company the amount received by him is exempt under section 10(6)(vi). He relied on the decision in Aditya V. Birla v. CBDT [1986] 157 ITR 470 (Bom.). Alternatively, he urged that the grossing up could be done only at one stage. Since the ITO has grossed up by levying tax on tax it is opposed to the ratio laid down in the decision in Superintending Engineer, Upper Sileru's case. 4. The learned departmental representative strongly urged that Mr. Clark was not an employee of the West German company and so section 10(6)(vi) was not applied. He had come on his own as a consulting engineer and for the services rendered by him, he was paid by the assessee-company. Alternatively, he urged that the assessee cannot say that he has no connection with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company to carry out the repairs to the M.G. Cylinder supplied by them to the assessee and, accordingly, Mr. Clark visited Bhadrachalam and carried out the repairs for which the assessee paid the amount to Mr. Clark. Thus, in our view, Mr. Clark was an employee of the West German company. For deciding employer-employee relationship, the test of control is not a decisive one. In Cassidy v. Ministry of Health [1951] 1 All ER 574 at p. 579, Lord Justice Sommerwell pointed out that the test of control of the manner of work is not universally correct, that there are many contracts of service where the master cannot control the manner in which work is to be done as in the case of a captain of a ship. In Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishments AIR 1974 SC 37, the Supreme Court at p. 42 held that in many skilled employments, to apply the test of control over the manner of work for deciding the question whether the relationship of master and servant exists would be unrealistic. This is a case where the workers were tailors who were paid on piece rate basis depending on the skill of the worker and the nature of the work. If the worker does not go to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te dated 13-4-1984. Whether the West German company had control over Mr. Clark in the supervision of the work is not a decisive factor in deciding the employer-employee relationship. In our view Mr. Clark was an employee of the West German company and for the services rendered by Mr. Clark as an employee, the assessee has paid the amount to him. The remuneration received by Mr. Clark as employee of the foreign enterprise for the services rendered by him during his stay in India is exempt under section 10(6)(vi). The said section reads as under: "10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included--- (1) to (5) (6) in the case of an individual who is not citizen of India,--- (i) to (v) (vi) the remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled--- (a) the foreign enterprise is not engaged in any trade or business in India ; (b) his stay in India does not exceed in the aggregate a period of ninety days in such previous year ; and (c) such remuneration is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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