1989 PLP 803 (PTD)

Explanation: For the purposes of this section-- (a) `Foreign currency' shall have the meaning assigned to it in the Foreign Exchange Regulation Act. 1973 (46 of 1973); (b) `foreign employer' means,-- (i) the Government of a foreign State; or (ii) a foreign enterprise; or '(iii) any association or body established outside India; (c) `technician' means a person having specialised knowledge and experience (i) constructional or manufacturing operations or mining or the generation or distribution of electricity or any other form of power; or (ii) agriculture, animal husbandry, dairy farming deep sea fishing or ship building; or (iii) public administration or industrial or business, management; or (iv) accountancy; or (v) any field of natural or applied science including medical science or social science: or (vi) any other field which the Board may prescribe in this behalf, who is employed .in a capacity in which such specialised knowledge and experience are actually utilised "

9. The only question involved .in this appeal is whether any, remuneration was received by the respondent in foreign currency from his employer, being a foreign employer for service rendered by him outside India. Mr. Ahuja counsel for the revenue contended that the remuneration received by a part-time consultant from a foreign employer or an Indian concern abroad cannot include remuneration paid to a person. Mr. Ahuja further submitted that this section was really a counterpart of section 10 (6) (vii) of the Act. He further submitted that it should be construed to-be confined to deduction to be given only in the case of remuneration given to an employee and not the fees paid to a consultant or a technician. We are unable to accept this contention. It has been specifically made clear that remuneration due should be chargeable under the head "Salaries" for the services rendered as a technician in section 10 (6,) (via). Section Ht) RRA does not use these phrases. Apparently, advisedly therefore it must follow that it did not cover fees received by the consultant for the services rendered outside India.

10. An analysis of section 80RRA reveals that in order to be entitled to deductions at the rate enumerated in the section by the respondent, the sum must be (i) remuneration, (ii) received by him in foreign currency, (iii) from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India. Furthermore, the terms and conditions of his service outside India must be approved by the Central Government. Further in the case of the respondent the deduction of the section would not be allowed in respect of the remuneration if such services related to any period after the expiry of the 36 months. The respondent was not employed beyond a period of 36 months. Indisputably, the sum concerned in this appeal, being fee, was remuneration in the sense being 'amount paid in lieu of services rendered'. The sum in question was received in foreign currency. There is no dispute as to that. The only question is whether the sum was received from 'any employer'. The other requirement is that the sum should be received for the services rendered outside India. There is no dispute as to that. The only question that requires consideration in the background of indisputable facts in this case is whether the sum received by the respondent was from an employer'. In other words, whether Thai Company was the employer of the respondent. On behalf of the revenue it Ahuja that it was only as a counter part of section 10 (6) (via) and that the section should be so considered properly. Mr. Palkhiwala appearing for the respondent pointed out, the object of section 80RRA of the Act was manifest; to encourage, firstly earning of foreign exchange by India, secondly, bringing that currency by Indian nationals from abroad to India and thirdly, improve the status of the Indians abroad and increasing the market of Indian technicians. It appears to us to be plausibe object in the present socio-economic context. We find that the amplitude of the expressions "employee" and "employer" covers the cases of consultant or technician. We find in the scheme of the section nothing to warrant any exception as contended for by the revenue. If we read the section with the object of the section in view as suggested by Mr. Palkhiwala then there is no warrant to restrict the meaning in the manner canvassed by the revenue before us. Mr. Ahuja, however, drew our attention to the objects appearing in clause (31) of the Finance Bill, 1975 which later on became the Act. We find nothing in clause (31) to suggest a restricted meaning as canvassed by Shri Abuja. The relevant portion of clause (31) reads as follows; "

31. Tax relief in respect of remuneration received from foreign employees by Indian technicians, etc.--Act presents,-Indian technicians, etc., who work for a short period during a financial year with a foreign Government or a foreign enterprise are liable to Indian tax if they remain "resident in India "for tax purposes in that year, on the whole of the remuneration received by them from the foreign employer, without any allowance in respect of expenditure incurred by them out of such remuneration for meeting higher living costs and other essential expenditure in foreign countries. To relieve this hardship, the Bill seeks to make a provision in the Income-tax Act for allowing a deduction in the computation of the taxable; income; of 50 per cent of the remuneration received by them from a foreign Government or a foreign enterprise or any association or body established outside India".

11. We find nothing to warrant a restricted construction as canvassed by Mr. Ahuja. We were also referred to the speech of the Hon'ble Minister introducing the Bill before the Parliament, where the Hon'ble Minister inter alia stated as follows: "There area, present certain income-tax exemption limits applying to salaried, assessees relating to house rent allowance and leave travel concessions. These are being liberalised. Indian technicians employed abroad are, also proposed to be given some tax relief."

12. Shri Ahuja contended that it was only to encourage salaried employees who were going abroad anti the cost of living was so high abroad to encourage them to get an exemption from tax on the salary earned abroad while working as a technician that this provision was introduced. But this does not indicate that any limitation was intended to be confined only to the salaried employee and not extended to any technician or consultant employed abroad for the period stipulated in the section. We find that there is no warrant in the section to restrain the expression "remuneration" received from a foreign employee only to the salary received by an employee. In our opinion employment as a technician for the purpose indicated by Shri Palkhiwala could also be an, object of the Act and in such a case the fee received by consultant or technician would also come within the purview of the section concerned. In Aiya'r's 'The Lexicon' 1940 Ed. At page 387 it has been stated that an employer is one who employs, one who engages or keeps men in service, one who uses or enjoys the service of other persons for pay or Wary. The words 'employer' or 'employee' are used not in any technical sense.

13. In Chintaman Rao v. State of Madhya Pradesh 1958 SCR 1340 at page 1346: (A.I.R. 1958 SC 388 at p.391) of the report, it was observed that the concept of employment involved three ingredients; (1) employer, (2) employee, and (3) the contract of employment. The employee is one who works for other for hire. The employer is one who employs the services of other persons. In the context of this Act, therefore, the expression `employee' will include a consultant or a technician employed by the foreign company because he would be working for other for hire. It is true that the respondent may serve more than one master. A man may in certain circumstances serve two masters; very often he does serve many. The expression "to employ" has been considered in Ellis v. Ellis & Co. (1905) 1 KB 324 and does not mean generally to find actual employment; it rather means to retain and pay a person whether employed or not but if employed then to be employed in the work only in respect of which contract is made. "Medical advisers may be employed at a salary to be ready in case of illness, members of theatrical establishments in case their labour should be needed; household servants in performance of their duty when their masters wish; in these and other similar cases the requirement of actual service is distinct from the employment by the party employing". In an agreement to "retain and employ", 'employ" means only to 'retain in the service and is mere tautology. See in this connection, Stroud's Judicial Dictionary, 4th Edition, Vol. 2 at page

893. The expression, however, must depend upon the context of the, particular provision in which the expression appears. It was held in England that an engineer appointed by a local authority to supervise the execution of works, but not subject to the local authority's supervision, is nevertheless an 'employee' within the meaning of section 40(1) of the Local Government Superannuation Act, 1937, in Morren v. Swinton and Pendlebury B.C. [1965] 1 WLR

576. In Chambers 20th Century Dictionary "employ" has been indicated to mean to occupy the time or attention of. "Employment" means an act of employing. In the Concise Oxford Dictionary "employee" means a person employed fro wages. "Employ" use of services of person. It follows, therefore, that it comprehend whole time servant or part-time engage. It is significant that section 80 RRA of the Act uses the expression "remuneration" and not salary to be entitled to deduction. In the aforesaid view of the matter we see no warrant to restrict the meaning of the expression "remuneration" to only salary received by an employ abroad. The literal meaning is clear we need not bother any more for the intention or the purpose. The intention, in our opinion, is writ large. In principle also we are unable to find any rationale or the reason for the distinction sought to be made on behalf of the revenue.

14. In the aforesaid view of the matter, we are of the, pinion that the High Court was right in dismissing the appeal and we find no reason to interfere with the order of the High Court. The appeal, therefore, fails and is accordingly, dismissed without any order as to costs. M.B.A./589/T Appeal dismissed.