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TMI Blog2016 (6) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... eal 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 assessee is engaged in the business of manpower recruitment services filed return of income on 30.9.2009 declaring income at ₹ 25,02,480/-. The assessment was completed u/s. 143(3) on 22.12.2011 determining income at ₹ 2,04,64,180/-. While completing the assessment, the Assessing Officer disallowed ₹ 1,56,73,056/- u/s. 40(a)(ia) being the payments made by the assessee to the persons recruited by her treating such payments as not in the nature of salary. It is the contention of 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lationship between the assessee and the recruited persons and therefore, the payments cannot be held to be salaries. The Ld. CIT(A) considering the material evidences submitted by the assessee and examining the averments of the Assessing Officer concluded that the recruited persons are employees of the 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 control exercised over the person employed, conclusion would be in favour of employer / employee relationship. In the case of persons working on sites abroad of foreign clients it was submitted that i) The appointment is by the assessee. ii) The supervision of the assessee is through supervisor and consultant. iii) The working hours, salary overtime. leave inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 Annexure 5 ' 3.3 Along with this the appellant has filed a copy of agreement Technical Service Blanket Contract by and between Toyo Engineering Corporation, on behalf of Joint Venture of TOYO ENGINEERING CORPORATION (TEC, INDUSTRIAL DEVELOPMENT RENOVATION ORGANIZATION OF IRAN (IDRO), JGC CORPORATION (JGC) ANI DAELIM INDUSTRIAL CO. LTD. (DIC). He has also filed a copy of agreement of Technical Service Contract entered by appellant with individuals deployed for the job abroad. I have gone through 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e he is not required them anymore. Simultaneously, TEC has asked appellant to arrange alternative person for them. The appellant has also filed a copy of certificate given to proprietor Mrs. Supriya 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 certificate to maintain some permanent records at her place of business. It shows that power of recruitment and dismissal rests with appellant firm only. I have also gone through Sec. 195 which is reproduced as under: 195. (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest {***} or any other sum chargeable under the provisions of this Act (not being income chargeable under the head Salaries shall, at the time of credit of such incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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