ACIT 27(3), NAVI MUMBAI V. SUPRIYA SUHAS JOSHI, MUMBAI

ITA 7468/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3736 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 15-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KASHYAPSR
• Keywords: Double taxation relief; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

ITA/7468-70/M/14 SUPRIYA S.JOSHI 1 , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER /.ITA.S./7468,7469&7470/MUM/2014 /ASSESSMENT YEARS: 2006-07 TO 2008-2009 ACIT 27(3),4 TH FLOOR,TOWER -6 VASHI RAILWAY STATION COMPLEX, VASHI,NEW MUMBAI VS. SUPRIYA SUHAS JOSHI,1601 SOLITAIRE HIRANANDANI,POWAI,MUMBAI-400076 PAN:AAIPJ1596L ( /APPELLANT ) ( / RESPONDENT) /.ITA.S./7663,7664&7665/MUM/2014 /ASSESSMENT YEARS: 2006-07 TO 2008-2009 SUPRIYA SUHAS JOSHI,1601 SOLITAIRE HIRANANDANI,POWAI,MUMBAI-400076 VS. ACIT 27(3),4 TH FLOOR,TOWER -6 VASHI,NEW MUMBAI ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI SANJEEV KASHYAP-SR. AR ASSESSEE BY:S/ SHRI MIHIR NANI WADEKAR /NEELABH SHREESH / DATE OF HEARING : 28.07.2016 / DATE OF PRONOUNCEMENT : 03.08.2016 , 1961 254 )1( ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.30.9.14 OF THE CIT(A)-33MU MBAI THE AO (AO.S) AND THE ASSESSEE HAVE FILED THE CROSS APPEALS FOR THE A BOVE MENTIONED 3 AY.S.AS THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON INVOL VING IDENTICAL ISSUE, SO WE ARE DISPOSING THEM OFF BY A CONSOLIDATED ORDER,FOR THE SAKE OF CONVENIENCE. THE DETAILS OF FILING OF ORIGINAL RETURNS, RETURNED INC OMES ASSESSED INCOMES AND ASSESSED INCOME U/S. 143(3) R.W.S.147 OF THE ACT CA N BE SUMMARISED AS UNDER :- AY DT OF ORIG ROI INCOME RETURNED ASSESSED INCOME INCOME U/S. 143(3) 147 2006-07 31.10.2006 RS.41,05,778/- RS.45,64,090/- RS.2,82,00 ,810/- ITA.S./7468,7469&7470/MUM/2014 AY.S.2006-07 TO 2008-2009 , (REVENUES APPEAL) : 2.THE ASSESSMENTS WERE REOPENED AS PER THE PROVISIO NS OF SECTION 147 BY THE AO BY ISSUING NOTICES U/S. 148 OF THE ACT FOR ALL T HE THREE YEARS.THE REASONS RECORDED FOR RE-OPENING,DTD. 28/ 03/2012 READ AS UN DER: ITA/7468-70/M/14 SUPRIYA S.JOSHI 2 1,'THE ASSESSEE IS ENGAGED IN MANPOWER CONSULTANCY AND RECRUITMENT SERVICES IN INDIA AND OVERSEAS. THE ASSESSEE ALSO CARRIES OUT P REPRINTING LABOUR JOBS, COLOUR GRAPHICS ETC. 2.DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN AS SESSEE'S OWN CASE OF A. Y. 2009- 2010, IT IS SEEN THAT THE ASSESSEE HAD MADE PAYMENT S OF RS. 1,56,73,056/- TO THE VARIOUS PERSONS/ ENTITIES ABROAD ON ACCOUNT OF COMPENSATION TO THE RECRUITED PERSONS (SUBCONT RACTOS),WITHOUT DEDUCTION OF TAX AT SOURCE.FOR THE DETAILED REASONS RECORDED IN ORDER U/S 143(3) OF THE ACT FOR A. Y.2009-201 0 THE ABOVE AMOUNT OF RS. 1,56,73,056/- WERE DISALLOWEC U/S 40(A) (I A) OF THE ACT AND ADDED BAC K TO THE TOTAL INCOME OF THE ASSESSEE. 3.IT IS SEEN FROM ASSESSEE'S RETURN OF INCOME FOR A . Y. 2006-07, 2007-2008 & 2008-09 THAT ASSESSEE HAS MADE SIMILAR FOLLOWING PAYMENTS O F RS. 1,85, 95, 173/- RS.3,69,84,320/- AND RS. 5,23,76,562/- RESPECTIVELY WITHOUT DEDUCTION OF TAX AT SOURCE.THE ABOVE PAYMENTS HAVE BEEN MADE BJY THE AS SESSEE WITHOUT DEDUCTION OF TAX AT SOURCE AND HENCE THESE PAYMENTS ARE DISALLOW ABLE U/S 40(A)(IA) OF THE ACT. 3.ACCORDINGLY,I HAVE REASON TO BELIEVE THAT AN AMOU NT OF RS.1,85,95,173/-, RS,3,69,84,320/- AND RS.5,23,76,562/- RESPECTIVELY FOR A.Y.2006-2007,2007-08 AND 2008-09 HAS ESCAPED ASSESSMENT. AS THE ASSESSMENT O F A. Y. 2006-2007,2007-08 AND 2008-09 WAS COMPLETED U/S 143(3) OF THE ACT, THE AS SESSMENT FOR A.Y.2006- 2007,2007-08 AND 2008-09 IS REOPENED U/S 147 OF THE ACT,AFTER OBTAINING DUE SANCTION,AS ENVISAGED IN SECION 151(2)OF THE ACT . 3. THE AO COMPLETED THE ASSESSMENTS,AS MENTIONED IN TH E EARLIER PART OF THE ORDER.THE FIRST APPELLATE AUTHORITY(FAA)REFERRED TO THE APPEAL FOR THE AY. 2009-10 FILED BY THE ASSESSEE AND THAT WAS ALLOWED BY THE THEN FAA.HE DIRECTED THE AO TO MAKE FURTHER VERIFICATION.THUS,THE APPEAL S FILED BY THE ASSESSEE WERE PARTLY ALLOWED I.E. SUBJECT TO VERIFICATION. 4. DURING THE COURSE OF HEARING BEFORE US,IT WAS BROUG HT TO OUR NOTICE THAT THE TRIBUNAL,VIDE ITS ORDER,DTD.31.05.2016(ITA/6566/MUM /2012-AY.2009-10)HAS DEALT WITH THE IDENTICAL ISSUE.WE FIND THAT THE TRI BUNAL HAS DELIBERATED UPON THE ISSUE AND HAS DECIDED IT AS UNDER: 2.THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS T HAT THE LD. CIT(A) ERRED IN HOLDING THAT PAYMENT MADE TO MANPOWER DEPLOYED OVERSEAS IS IN TH E NATURE OF SALARY AND THE PROVISIONS OF SEC. 195 OR 192 OF THE ACT DOES NOT APPLY TO SUCH P AYMENTS. 3.THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANPOW ER RECRUITMENT SERVICES FILED RETURN OF INCOME ON 30.9.2009 DECLARING INCOME AT RS. 25,02,4 80/-. THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 22.12.2011 DETERMINING INCOME AT RS. 2,04 ,64,180/-. WHILE COMPLETING THE ITA/7468-70/M/14 SUPRIYA S.JOSHI 3 ASSESSMENT, THE ASSESSING OFFICER DISALLOWED RS. 1, 56,73,056/- U/S. 40(A)(IA) BEING THE PAYMENTS MADE BY THE ASSESSEE TO THE PERSONS RECRUI TED BY HER TREATING SUCH PAYMENTS AS NOT IN THE NATURE OF SALARY. IT IS THE CONTENTION OF TH E ASSESSEE THAT THE PAYMENTS WERE MADE TOWARDS SALARY TO THE EMPLOYEES WHO ARE ALL NON-RES IDENTS AND THEREFORE THE PROVISIONS OF SEC. 195 HAVE NO APPLICATION FOR THE SALARY PAYMENT S. HOWEVER, THE ASSESSING OFFICER HELD THAT THE AMOUNT DEBITED UNDER THE HEAD 'SALARIES' T O 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 DISALLOWAN CE HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE WERE TOWARDS SALARIES TO HER EMPLOYEES WHO ARE ALL NON-RESIDENTS AND THE PROVISIONS OF SEC. 195 HAVE NO APPLICATION. HE ALSO HELD THAT THE PROVISIONS OF SEC. 192 ALSO HAVE NO APPLICATION SINCE THE SALARIES PAID BY THE ASSESSEE TO THE EMPLOYEES ABROAD ARE NOT LIABLE TO BE CHARGEABLE TO TAX IN INDIA. 5. AGAINST THIS DECISION, REVENUE IS IN APPEAL BEFO RE US. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDERS OF THE ASSESSING OFF ICER IN INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS ON TH E 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 N O EMPLOYEE-EMPLOYER RELATIONSHIP BETWEEN THE PERSONS RECRUITED ABROAD AND THE ASSESS EE 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 MAD E THE DISALLOWANCE U/S. 40(A)(IA) FOR NON DEDUCTION OF TDS ON SUCH PAYMENTS. 6. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO TH E PROVISIONS OF SEC. 195 SUBMITS THAT THE PROVISIONS OF SEC. 195 ARE APPLICABLE ONLY TO THE I NTEREST OR ANY OTHER SUM CHARGEABLE UNDER PROVISIONS OF THE I.T. ACT EXCEPT INCOME CHARGEABLE UNDER THE HEAD SALARIES. THEREFORE, HE SUBMITS THAT THE PROVISIONS OF SEC. 195 ARE VERY CL EAR THAT THE SAME ARE NOT ATTRACTED TO THE PAYMENTS MADE TOWARDS SALARIES. HE ALSO SUBMITS THA T PROVISIONS OF SEC. 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 RELI ANCE ON THE ORDER OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE U/S. 40(A)(IA) OF TH E ACT AND PLEADS FOR SUSTAINING THE ORDER OF THE LD. CIT(A). 7. HEARD BOTH SIDES, PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. THE ASSESSING OFFICER TREATED THE PAYMENTS MADE BY THE ASSESSEE TO THE PE RSONS RECRUITED ABROAD IS NOT IN THE NATURE OF SALARIES AND APPLIED THE PROVISIONS OF SE C. 195 R.W. SEC. 40(A)(IA) AND DISALLOWED THE SAME AS NO TDS WAS MADE BY THE ASSESSEE. THE AS SESSING OFFICER CONCLUDED THAT THERE IS NO MASTER AND SERVANT RELATIONSHIP BETWEEN THE ASSE SSEE AND THE RECRUITED PERSONS AND THEREFORE, THE PAYMENTS CANNOT BE HELD TO BE SALARI ES. THE LD.CIT(A)CONSIDERING THE MATERIAL EVIDENCES SUBMITTED BY THE ASSESSEE AND EX AMINING THE AVERMENTS OF THE ASSESSING OFFICER CONCLUDED THAT THE RECRUITED PERSONS ARE EM PLOYEES 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 SA LARIES. WHILE HOLDING SO, THE LD. CIT(A) OBSERVED AS UNDER: ' 3.2. THE APPELLANT HAS ALSO CITED CASE LAWS IN TH E CASE OF CIT VS UR CHAPHEKAR & ORS(1977) 107 ITR 49(BOM). APPELLANT HAS FILED FURT HER 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 WOUL D BE IN FAVOUR OF EMPLOYER / EMPLOYEE RELATIONSHIP. IN THE CASE OF PERSONS WORKING ON SITES ABROAD OF F OREIGN CLIENTS IT WAS SUBMITTED THAT I) THE APPOINTMENT IS BY THE ASSESSEE. II) THE SUPERVISION OF THE ASSESSEE IS THROUGH SUPE RVISOR AND CONSULTANT. ITA/7468-70/M/14 SUPRIYA S.JOSHI 4 III) THE WORKING HOURS, SALARY OVERTIME. LEAVE INCR EMENT, HEALTH / PERSONAL ACCIDENT INSURANCE, BOCKING, RESCHEDULING / CANCELLATION OF AIR TICKETS, GIVING ADVANCE IN THE EVENT OF CONTINGENCIES AND OTHER WELFARE MEASURES ARE IMPLEM ENTED BY THE ASSESSEE. IV)THE POWER TO SETTLE DISPUTES, TO TERMINATE SERVI CES OF THE EMPLOYEES VESTS WITH ASSESSEE SOLELY. 2) LN ADDITION TO VARIOUS EVIDENCES LAID IN SUPPORT OF ABOVE- STATED CONTENTION OF EMPLOYER- EMPLOYEE RELATIONSHIP, IT IS PROPOSED TO SUBMIT FUR THER EVIDENCE AS UNDER: I) COPY OF LICENSE ISSUED BY MINISTRY OF LABOUR/ OV ERSEAS INDIAN AFFAIRS PURSUANT TO WHICH THE ENTIRE BUSINESS OF THE ASSESSEE IS CARRIED OUT IS MARKET AS ANNEXURE-I. THE ATTENTION OF LEARNED CIT(A) IS DRAWN TO CLAUSES OF THE LICENSE. II) THE LICENSE WAS ISSUED TO RECRUIT MAXIMUM 300 W ORKERS FOR 5 YEARS. VI) THE ASSESSEE CANNOT APPOINT SUB AGENTS TO CARRY OUT HER BUSINESS VII) THE ASSESSEE HAS TO PAY PRESCRIBED STANDARD WA GES VIII) MAINTENANCE OF VARIOUS PARTICULARS EMPLOYEES. THUS THE LICENSE UNDER WHICH THE ASSESSEE IS ALLOWE D TO CARRY OUT BUSINESS ALSO CLEARLY SHOWS THAT ASSESSEE CAN EMPLOY EMPLOYEES ONLY AND NOT AGE NTS. II) THE PERSONS VISITING FOREIGN VISITED ON EMPLOYM ENT OR WORK VISA WHICH IS FOR LONGER DURATION. SPECIMEN OF WORK VISA IS MARKED AS ANNEXU RE-2. WHEN EMPLOYEE ARRIVES IN FOREIGN COUNTRY, HE IS GIVEN DISEMBARKATION CARD BY DEPARTM ENT 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 EMPLOYED WHO WERE GRANTED EMPLOYMENT VISA FOR FIVE YEARS WERE EMPLOYE ES ONLY AND NOT CONSULTANTS OF PROFESSIONALS VISITING FOREIGN COUNTRY ON SIX MONTH S VISA 3) EMPLOYMENT FOR A FIXED TENURE. THE EMPLOYMENT CONTRACT CAN BE FOR A FIXED TENURE O R FOR THE TENURE OF THE PROJECT. PLEASE FIND ENCLOSED HEREWITH ANNUAL REPORTS OF SOME OF THE COM PANIES APPOINTING MANAGING DIRECTORS FOR FIXED TENURE OF SAY 3-5 YEARS AS ANNEXURE-4. MA NAGING DIRECTOR BEING SUBJECT TO OVERALL SUPERVISION AND CONTROL OF BOARD OF DIRECTORS IS AN EMPLOYEE OF THE COMPANY. IT IS NOT NECESSARY THAT EMPLOYMENTSHOULD BE PERPETUAL OR THA T EMPLOYEE SHOULD BE GIVEN ASSURANCE OF JOB ON COMPLETION OF TENURE. IN SPITE OF ABOVE LEGA L 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 W AS WORKING ON SAUDI ARABIA SITE FROM 17.05.2008 TO 23.06.2008 WAS EMPLOYED TO WORK ON QA TAR SITE FROM 25.1 1.2008 TO 24.05.2009 ANNEXURE 5 ' 3.3 ALONG WITH THIS THE APP ELLANT HAS FILED A COPY OF AGREEMENT TECHNICAL SERVICE BLANKET CONTRACT BY AND BETWEEN T OYO ENGINEERING CORPORATION, ON BEHALF OF JOINT VENTURE OF TOYO ENGINEERING CORPORATION (T EC, INDUSTRIAL DEVELOPMENT & RENOVATION ORGANIZATION OF IRAN (IDRO ), JGC CORPORATION (JGC) ANI DAELIM INDUSTRIAL CO. LTD. (D IC). HE HAS ALSO FILED A COPY OF AGREEMENT OF TECHNICAL SERVICE CONTRACT ENT ERED BY APPELLANT WITH INDIVIDUALS DEPLOYED FOR THE JOB ABROAD. I HAVE GONE THROUGH TH E 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 ENTER ED INTO CONTRACT WITH INDIVIDUALS UPON THE TEC'S REQUEST MADE, GOVERNED BY THE TECHNICAL SERVI CE '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 - T EC IN THE JOINT VENTURE. THIS MAKES IT CLEAR THAT THE APPELLANT AS WELL AS TEC BOTH WERE REQUIRE D TO ENTER INDIVIDUAL SERVICE CONTRACT WITH THESE PERSONS WHO ARE TO BE DEPLOYED FOR THE JOB ON THE SITE OF THE PROJECT. THE TECHNICAL SERVICE CONTRACT BETWEEN APPELLANT AND INDIVIDUAL T HEN MAKES IT CLEAR THAT WHAT APPELLANT HAS CONTRACTED IS SERVICES OF THE QUALIFIED AND SKILLED PERSONNELS AS PER WHICH THEY ARE REQUIRED TO WORK 60 HOURS A WEEK FOR 25 MONTHS ON PROVISIONAL B ASIS. THIS CONTRACT ALSO PROVIDES THAT ACCOMMODATION AND MEAL WILL BE FREE OF COST AND THE N SICK LEAVE OF MAXIMUM 12 DAYS IN A YEAR AND HOME LEAVE FOR 15 DAYS WILL BE AVAILABLE F ROM APPELLANT'S SIDE TO THE PERSON. THE CONTRACT ALSO TALKS OF P.A. POLICY AND OTHER INSURA NCES IN INDIA AND WORKING COUNTRY, ITA/7468-70/M/14 SUPRIYA S.JOSHI 5 UNIFORM, SAFETY APPARATUS, AIR TICKET AND AIR FARE AND NECESSARY DOCUMENTATION FOR VISA AND WORK PERMIT WHICH ALL ARE TO BE REIMBURSED BY APPEL LANT FIRM. IT IS ONLY THE IMPORT TAX, CUSTOM DUTY AND EXCESS BAGGAGE CHARGES ON PERSONAL EFFECTS WHICH WILL BE BORNE BY THE PERSON ENTERING IN TO THE CONTRACT WITH THE APPELLA NT FIRM. IN VIEW OF THESE CLAUSES THERE IS NO DOUBT THAT APPELLANT HAS ENTERED IN TO THE CONTRACT WITH THESE PERSONS WHO ARE DEPLOYED AS MAN POWER OF THE APPELLANT TO THE SITE OF THE PROJE CT AS WAS REQUIRED BY THE BLANKET CONTRACT BETWEEN TEC AND THE APPELLANT RADIANT SERVICES IS T ECHNICAL SERVICE CONTRACT IS GOVERNED BY THE CONTRACT BETWEEN TEC AND APPELLANT ONLY DEALING WITH ISSUES OF SICK LEAVE, REIMBURSEMENT OF AIR FARE, PA POLICY, VISA DOCUMENTATION, PROVISI ONS 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 FAC ILITIES OR PERQUISITES WHOSE MONETARY VALUES ALSO IS NOT MEASURED GO A LONG WAY TO SHOW T HAT THE CONTRACT IS OF HIRING SERVICE OF THESE PERSONS WITH FIXED REMUNERATION PER MONTH WHE RE NATURE OF JOB WORK IS ALSO NOT PRE DETERMINED. THIS CAN ONLY BE A CONTRACT OF SERVICE AND WHEN THE SERVICE ITSELF IS NOT SPECIFIED AT THE TIME OF ENTERING THE CONTRACT, IT CAN BE ONL Y EMPLOYMENT ON CONTRACT BASIS. THE APPELLANT HAS ALSO FURNISHED COPIES OF SOME E-MAIL CORRESPONDENCES WHEREIN TEC HAS COMMUNICATED WITH THE APPELLANT SAYING THAT A PARTI CULAR PERSONS PERFORMANCE IS NOT SATISFACTORY AND HENCE HE IS NOT REQUIRED THEM ANYM ORE. SIMULTANEOUSLY, TEC HAS ASKED APPELLANT TO ARRANGE ALTERNATIVE PERSON FOR THEM. T HE APPELLANT HAS ALSO FILED A COPY OF CERTIFICATE GIVEN TO PROPRIETOR MRS. SUPRIYA S JOSH I CERTIFICATE U/S10 OF THE IMMIGRATION AT 1983 TO COMMENCE OR CARRY OFF THE BUSINESS OF RECRU ITMENT FOR DEPLOYMENT OF INDIAN WORKERS WITH FOREIGN EMPLOYERS. 3.4. I HAVE GONE THROUGH THE SAME AND NOTED THAT CE RTIFICATE HAS BEEN GIVEN BY MINISTRY OF LABOUR, GOVT. OF INDIA ALLOWING TO CONTINUE RECRUIT MENT 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 CERTI FICATE TO MAINTAIN SOME PERMANENT RECORDS AT HER PLACE OF BUSINESS. IT SHOWS THAT POWER OF RE CRUITMENT 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 N ON-RESIDENT, NOT BEING A COMPANY, OR TO A FOREIGN COMPANY, ANY INTEREST {***} OR ANY OTHER SU M CHARGEABLE UNDER THE PROVISIONS OF THIS ACT (NOT BEING INCOME CHARGEABLE UNDER THE HEAD 'SA LARIES' SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE T IME OF PAYMENT THEREOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WH ICHEVER IS EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATE IN FORCE:' 3.5 SINCE SEC. 195 DOES NOT TAKE SALARY IN ITS PURV IEW APPLICATION OF SEC.195 IN THE CASE IS NOT TENABLE. THE APPELLANT IN THE SUBMISSION HAS MADE A N ALTERNATIVE SUBMISSION ALSO AND I.E. AS ALL THE PERSONS ARE WORKING OUTSIDE INDIA TO WHOM R EMUNERATIONS WERE PAID FROM THE BANK ACCOUNT OF THE ASSESSEE SITUATED OUTSIDE INDIA, NEI THER SECTION 192 NOR SECTION 195 ARE APPLICABLE AS THE INCOME IS NOT ACCRUING OR ARISING IN INDIA AS PER THE PROVISION OF SECTION 9(1). APPELLANT HAS ALSO STATED THAT AS PER THE REL EVANT PROVISIONS OF DTAA APPLICABLE IN THE CASE PROVISION OF SECTION 40(A)(IA) ARE NOT ATTRACT ED IN THE CASE. 3.6. HAVING DECIDED THAT IN THE INSTANT CASE WHEN T HE SERVICE IS OBTAINED ON FIXED REMUNERATION BASIS AND CONTROL OF REMOVAL AND RECRU ITMENT IS EXERCISED BY THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT THE CONTRACT IS CONT RACT IN THE NATURE OF EMPLOYMENT FOR A PARTICULAR PERIOD AND HENCE I AM CONVINCED THAT SEC 195 IS NOT APPLICABLE IN THE CASE. THE APPELLANT HAS ALSO MADE AN ALTERNATIVE PLEA THAT TH ESE ALL PERSONS RECRUITED BY HER ARE NON RESIDENT INDIANS AND INCOME HAS NOT ACCRUED OR ARIS EN IN INDIA AND THEN UNDER DTAA SCHEME ALSO NO TDS HAS TO BE MADE IN THEIR CASES FROM THEI R REMUNERATIONS. AFTER GOING THROUGH THE SUBMISSIONS, I AM IN AGREEMENT WITH THE APPELLANT T HAT THE REMUNERATION PAID BY THE APPELLANT FIRM FOR THE CONTRACT OF SERVICE BEING IN THE NATURE OF SALARY ONLY, NO TDS REQUIRED TO BE DEDUCTED. THE DISALLOWANCES MADE U/S. 40(A)(I A) IS DELETED. GROUND NO. 1,2 AND 3 ARE ALLOWED.' ITA/7468-70/M/14 SUPRIYA S.JOSHI 6 8. AS COULD BE SEEN FROM THE ABOVE, IT IS THE FINDI NG OF THE LD. CIT(A) THAT THE PERSONS RECRUITED IN ABROAD ARE ALL EMPLOYEES OF THE ASSESS EE AND THE CONTRACT IS IN THE NATURE OF EMPLOYMENT, THEREFORE PROVISIONS OF SEC. 195 ARE NO T APPLICABLE. THE ABOVE FINDINGS HAVE NOT BEEN CONTROVERTED OR REBUTTED BY THE REVENUE WITH E VIDENCES. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. C IT(A) IN HOLDING THAT REMUNERATION PAID BY THE ASSESSEE FOR THE CONTRACT OF SERVICES ARE IN TH E NATURE OF SALARY ONLY AND NO TDS IS REQUIRED TO BE MADE U/S. 195 OF THE ACT. HENCE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. WE FIND THAT THE ASSESSMENTS FOR THE ABOVE MENTIONE D THREE AY.S.WERE RE- OPENED ON THE BASIS OF THE ASSESSMENT COMPLETED FOR THE AY.2009-10,THAT THE TRIBUNAL HAD DISMISSED THE APPEAL FILED BY THE AO F OR THAT YEAR.RESPECTFULLY, FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE SUBSEQU ENT AY.,WE DECIDE THE EFFECTIVE GROUNDS OF APPEAL AGAINST THE AO FOR ALL THE THREE AY.S. ITA.S./7663,7664&7665/MUM/2014,AY.S.2006-07 TO 2008 -2009 (ASSESSEES APPEALS) : AS WE HAVE DECIDED THE APPEALS FILED BY THE AO FOR ALL THE THREE AY.S.,SO,WE ALLOW THE APPEALS FILED BY THE ASSESSEE FOR STATIST ICAL PURPOSES.THE MAIN ISSUE RAISED BY HER IS ABOUT VALIDITY OF RE-OPENING.WE HA VE DECIDED THE ISSUE ON MERITS,SO,THE EFFECTIVE GROUNDS RAISED BY HER ARE A LLOWED,AS STATED EARLIER. AS A RESULT APPEALS FILED BY THE AO FOR THE THREE A Y.S STANDS DISMISSED AND THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST,2016. 3 ,2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03 .08.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.