Judgment:
ORDER
1. The revenue is aggrieved by an order dated 30-6-2006 passed by the Income Tax Appellate Tribunal, Delhi Bench 'A' in ITA Nos. 1914-1918/ Delhi/2001 relevant for the financial years 1994-95 to 1998-99.
2. The assessed is a non-resident company and in December, 1997, it had set up a liaison company in India, prior to which it had no presence in India.
3. The assessed entered into agreements captioned as 'Consulting Agreement' with several individuals. These agreements were entered into in the USA and one sample agreement is with Anil Kumar Bhatnagar, with which we propose to deal.
4. According to the revenue, Anil Kumar Bhatnagar was not a consultant but was an employee of the assessed and, thereforee, payments made to him under the agreement were subject to tax deduction at source under Section 192 of the Income Tax Act, 1961.
5. However, the assessed was of the view that since Anil Kumar Bhatnagar was a consultant, tax was liable to be deducted at source under Section 194J of the Act. The Commissioner (Appeals) as well as the Tribunal looked into the agreements and concluded that there was no employer-employee relationship between the parties and that Anil Kumar Bhatnagar and others were merely professional consultants and, thereforee, Section 194J of the Act was applicable.
6. We have also perused the agreement which has been placed on record and we find that as per Clause 1, the consultancy was on a temporary basis. It appears that it was extended from time to time but that would depend upon the nature of the consultancy, which was essentially temporary. The nature of relationship is explained in Clause 4 of the agreement and it is stated that the relationship will be that of customer and independent contractor acting as a temporary consultant. The consultant is not entitled to participate in any welfare benefit plans or programmes maintained by the assessed including Medical Plan, Dental Plan, Life. Accidental Death and Dismemberment and Travel Accident Plan, etc. Clause 6 of the agreement entitles the assessed to claim reimbursement on travel and other authorized expenses on production of a receipt.
7. Clause 11 of the agreement is of importance and the Tribunal has rightly placed reliance thereon. This clause reads as follows:
11. Hold Harmless.--The Consultant agrees that no liability shall attain in favor of the consultant as against any officer, director, member, agent or employee of the Company, but that he will instead look solely to the assets of the Company for satisfaction of any debts arising out of this Agreement. Consultant agrees to indemnify and hold harmless Company and its officers, directors, employees, agents, parents, subsidiaries and affiliates from and against any and all liabilities, penalties, demands and B damages, including attorney's fees and costs of defense, which it may suffer or incur, arising out of or in connection with this Agreement of the performance of services hereunder.
8. It is clear on a reading of Clause 11 of the Agreement that there is no employer-employee relationship between the parties. Moreover, it is unlikely that in any corporation, an employee would indemnify his employer and other employees against all liabilities, as provided for in Clause 11 of the Agreement.
9. Both the appellate authorities have looked at the Agreements and examined them in detail and have come to the conclusion that there is no employer-employee relationship between the parties and, thereforee, the provisions of Section 192 of the Act are not applicable.
10. We do not find any reason to disagree with the view taken by the Commissioner (Appeals) as well as by the Tribunal. In our opinion, no substantial question of law arises.
The appeal is dismissed.