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2016 (6) TMI 296 - ITAT MUMBAI

2016 (6) TMI 296 - ITAT MUMBAI - TMI - TDS u/s 192 or 195 - payment made to manpower deployed overseas is in the nature of salary or otherwise - disallowance made u/s. 40(a)(ia) - Held that:- It is the finding of the Ld. CIT(A) that the persons recruited in abroad are all employees of the assessee and the contract is in the nature of employment, therefore provisions of Sec. 195 are not applicable. The above findings have not been controverted or rebutted by the Revenue with evidences. In the cir .....

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r For the Appellant : Shri Pankaj Kumar For the Respondent : Shri M.C. Naniwadekar ORDER Per C. N. Prasad, JM This appeal is filed by the Revenue against the order of the Ld. CIT(A)-33, Mumbai dated 28.08.2012 pertaining to assessment year 2009-10. 2. The only issue in the appeal of the Revenue is that the Ld. CIT(A) erred in holding that payment made to manpower deployed overseas is in the nature of salary and the provisions of Sec. 195 or 192 of the Act does not apply to such payments. 3. The .....

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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 .....

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(ia) of the Act for non-deduction of TDS on the salaries paid by the assessee to its non-resident employees. Reiterating the contentions of the Assessing Officer, the Ld. Departmental Representative submits that there is no employee-employer relationship between the persons recruited abroad and the assessee and therefore the payments made by the assessee are not in the nature of salary. Hence, the provisions of Sec. 195/192 are attracted and the Assessing Officer has rightly made the disallowanc .....

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c. 192 are also not attracted since all these salaries were paid to the non-resident employees and they are not chargeable to tax in India. He strongly places reliance on the order of the Ld. CIT(A) in deleting the disallowance made u/s. 40(a)(ia) of the Act and pleads for sustaining the order of the Ld. CIT(A). 7. Heard both sides, perused the orders of the authorities below. The Assessing Officer treated the payments made by the assessee to the persons recruited abroad is not in the nature of .....

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e assessee and therefore the payments made for the recruited persons abroad are nothing but salaries only and the provisions of Sec. 195 are not attracted to such salaries. While holding so, the Ld. CIT(A) observed as under: 3.2. The appellant has also cited case laws in the case of CIT vs UR Chaphekar & Ors (1977) 107 ITR 49(Bom). Appellant has filed further written submission dated 09.08.2012 stating as under:- I) Employer Employee Relationship It was submitted that greater the degree of c .....

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cies 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 .....

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ed on employment or work visa which is for longer duration. Specimen of work visa is marked as Annexure-2. When employee arrives in foreign country, he is given disembarkation card by Department of Foreign Affairs of the traveled country showing purpose of journey as "employment" Specimen is marked as Annexure-3. Any foreigner if he visits country on business visa or tourist visa is required to leave that country in six months. This fact also supports the contention that persons employ .....

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rectors is an employee of the Company. It is not necessary that employmentshould be perpetual or that employee should be given assurance of job on completion of tenure. In spite of above legal position it has been endeavor of the assessee to provide employment to the employees who completed their tenure. Specimen example is in case of Mr. Rajan Chatham vally who was working on Saudi Arabia site from 17.05.2008 to 23.06.2008 was employed to work on Qatar site from 25.1 1.2008 to 24.05.2009 Annexu .....

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ugh 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 ven .....

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dation 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 available from appellant's side to the person. The contract also talks of P.A. Policy and other insurances in India and working country, uniform, safety apparatus, Air ticket and Air Fare and necessary documentation for Visa and work permit which all are to be reimbursed by appellant firm. It is only the Import Tax, custom duty and excess baggage charges on personal effect .....

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ir Fare, PA Policy, Visa Documentation, Provisions for bonus for overtime and most importantly Job description to be specified at the job site and then provision for accommodation and meal free of cost. Thus, here facilities or perquisites whose monetary values also is not measured go a long way to show that the contract is of hiring service of these persons with fixed remuneration per month where nature of job work is also not pre determined. This can only be a contract of service and when the .....

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priya S Joshi certificate u/s10 of the immigration at 1983 to commence or carry off the business of recruitment for deployment of Indian workers with foreign employers. 3.4. I have gone through the same and noted that certificate has been given by Ministry of Labour, Govt. of India allowing to continue recruitment for 5 years. This certificate puts an obligation on the appellant not to employee and sub-agent to conduct or carry her business and also makes it mandatory for the holder of certifica .....

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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 situa .....

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