Law:

Section:

Section 192 of the Income-tax Act, 1961 - Deduction of tax at source - Salary - Applicant-Institute has proposed to engage honorary part-time teachers on contract basis to take classes in German language - Terms of proposed agreement between applicant and part-time teachers clearly indicate fact of control of teachers by applicant both in regard to work to be done and manner in which it should be done - Whether mere fact that agreement gives liberty to teachers to work for any place, institute or company during tenure of agreement and it clarifies that teacher shall not have status of employee nor shall be entitled to avail benefits of regular employees, will militate against relationship of master and servant between applicant and teacher - Held, no - Whether, therefore, applicant is obliged to deduct tax at source from payment of honorarium to honorary part-time teachers under section 192 - Held, yes FACTS The applicant institute, which is a non-resident taxable entity has proposed to engage honorary part-time teachers on contract basis to take classes in German language during each semester seeks, in application under section 245Q(1), advance ruling on the question whether under Act institute is liable to deduct tax at source from payments made to honorary Teachers. The applicant claims that the part-time teachers engaged for each semester are not its employees and as no salary is paid to them, no tax is required to be deducted under section 192. The Jurisdictional Commissioner states that since the applicant is promoting the German language in India, it prescribes the syllabus, fixes the number of sessions and the strength of the class, the teachers are under the total control of the applicant; the applicant has the power to appoint teachers, to review their performance, to extend their term of engagement or to remove them from the employment; the mere facts that they are part-timers and are free to accept other assignments and under the agreement they will not have the status of full-fledged employees and will not get such benefits as are available to regular employees, do not change the nature of relationship between the applicant and the teachers as the…

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