Case: Central Board Of Direct Taxes And Others A Vs. Aditya V. Birla

the Act. We find nothing in Clause 31 to suggest a restricted meaning as canvassed by Shri Ahuja. The relevant portion of Clause 31 reads as follows: "31. Tax relief in respect of remuneration received from foreign employees by Indian technicians, etc. - At present, 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 remunerations 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 Honble Minister introducing the Bill before the Parliament, where the Honble Minister, inter alia stated as follows: "There are at 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 aboard 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 and the cost of living was so high abroad to encourage them to get an exemption from tax on the salary earned abroad 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 any technician or consultant employed abroad for the period stipulated in the section. We find that there is not warrant in the section to restrict the expression "remuneration" received from a foreign employer 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 second concerned. In Aiyar : The Lexicon 1940 edn., 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 salary. The words employer or employee are used not in any technical sense. 13. In Chintaman Rao v. State of M.P. ((1958) SCR 1340 : AIR 1958 SC 388 ) at page 1346 of 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 masters. 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. Joseph 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, Strouds 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 authoritys 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 : (1965) 2 All ER 349) 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 for wages. "Employ" means use of services of person. It follows, therefore, that it comprehends wholetime servant or part-time engagee. It is significant that Section 80-RRA of the Act uses the expression "remuneration" and not salary to be entitled to deductionIn the aforesaid view of the matter we see no warrant to restrict the meaning of the expression "remuneration" to only salary received by an employee 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 opinion that the High Court was right in dismissing the appeal and we find no reason to interfere with the order of High Court. 15.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]10. An analysis of Section 80-RRA 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 employee. In other words, whether Thai Company was the employer of the respondent. On behalf of the revenue it was submitted by Mr. Ahuja that it was only as a counterpart of Section 10(6)(vi-a) and that the section should be so considered properly. Mr. Palkhiwala appearing for the respondent pointed out the object of Section 80-RRA 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, to improve the status of the Indians abroad and increasing the market of Indian technician. It appears to us to be plausible 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 was 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 ds. 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 Ahuja.Shri Ahuja contended that it was only to encourage salaried employees who were going abroad and the cost of living was so high abroad to encourage them to get an exemption from tax on the salary earned abroad 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 any technician or consultant employed abroad for the period stipulated in the section. We find that there is not warrant in the section to restrict the expression "remuneration" received from a foreign employer 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 second concerned. In Aiyar : The Lexicon 1940 edn., 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 salary. The words employer or employee are used not in any technicalis significant that Section 80-RRA of the Act uses the expression "remuneration" and not salary to be entitled to deductionIn the aforesaid view of the matter we see no warrant to restrict the meaning of the expression "remuneration" to only salary received by an employee 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 theIn the aforesaid view of the matter, we are of the opinion that the High Court was right in dismissing the appeal and we find no reason to interfere with the order of High Court.