(1.) Assessee entered into a contract with Alfa Crew.
Under the contract, Alfa Crew became entitled to receive from the assessee a fixed fee of U.S. $869 per day, salary of crew to be provided by Alfa Crew in U.S. dollar as per invoices and handling charge of 5 percent on such salary. Crew was provided by Alfa Crew to the assessee, whereupon assessee engaged all such crew as its own employee. Assessee, during the Assessment Year 2004- 2005, paid Rs. 92,99,899/- to Alfa Crew on account of fixed fee and Rs. 1,32,27,988/- on account of handling charges, aggregating to Rs. 2,03,73,617/-. There is no dispute that on the sum of Rs. 2,03,73,617/-, assessee deducted tax at source and deposited the same with the Department. Assessee paid to Alfa Crew a sum amounting to Rs. 26,45,59,780/- on account of salary payable to those crew. It did not deduct any tax at source. In the return filed by the assessee, it claimed deduction of Rs. 2,03,73,617/- paid on account of fixed fee and handling charges as well as of Rs. 26,45,59,780/- on account of salary. The Assessing Officer allowed deduction of Rs. 2,03,73,617/-, but did not allow deduction of Rs. 26,45,59,780/- holding that the same was part of the fees for technical services, on which tax as was deductible at source was not deducted, and as the same is specifically not deductible in terms of Section 40(a)(i) of the Income Tax Act (hereinafter referred to as the Act). Aggrieved thereby, assessee went before the Commissioner of Appeals and lost. Assessee then approached the Tribunal and succeeded before the Tribunal. Aggrieved thereby, appellants are before us.
(2.) The Tribunal has recorded a finding, which finding is not in dispute, that the entire salary of Rs. 26,45,59,780/- was paid to different people, who were foreigners and who earned those salaries by serving in India for a period of less than 90 days during the relevant assessment year. The fact remains that Section 192 of the Act deals with the obligation of the employer to deduct tax at source when salary is paid by the employer to its employees. If the payment, with which we are concerned, was salary, then it was obligatory on the part of the assessee to deduct tax on salary under Section 192 of the Act at the time of payment of salary. If the payment was not on account of salary, but on account of technical services, then the assessee was required to deduct tax at source in respect of such payment under Section 195 of the Act. The Tribunal, on facts, has come to a conclusion to the effect that the payment, with which we are concerned, was payment of salary and not payment on account of technical services. The facts, upon which the Tribunal has arrived at the said conclusion, are not being disputed in the appeal. If those facts are not disputed, then the one and the only conclusion would be that the payments, with which we are concerned, were payment of salary and not technical fees.
(3.) As aforesaid, under Section 192 of the Act, it was obligatory on the part of the assessee to deduct tax, but, as stated in section 192 of the Act, on the estimated income of the employee. In the instant case, as stated above, the employees, being foreigners and they having earned those salaries while working in India during a period less than 90 days, those salaries, in view of Section 10(6)(viii) of the Act, are not income of the employees in India. Therefore, the assessee employer, in the instant case, could not deduct any tax on those salaries under section 192 of the Act, though they were obliged to do so.;