TMI Blog2011 (9) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... oing on a wrong premise or law and without taking into consideration the basic ingredients that the alleged amount of salary was not chageable to tax in India - Decided in favour of assessee. - ITR No. 81 of 1995 - - - Dated:- 28-9-2011 - Hon'ble Sunil Ambwani, J. Hon'ble Kashi Nath Pandey, J. Petitioner Counsel :- S.C.,B. Agarwal,B.J. Agarwal,S. Chopra Respondent Counsel :- S.D.Singh. We have heard Shri Shambhu Chopra for the Income Tax Department. Shri S.D. Singh appears for the assessee-company. In this Income Tax Reference relating to Assessment Year 1987- 88, the following question of law arises for consideration by the Court:- "Whether, on the facts and in the circumstances of the case, the ld. Tribunal is lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e companies requiring funds to meet rupees wage commitment. Wages so paid were deemed as foreign exchange repatriated in the country and allowed to be credited in the NRE a/c of their respective employees. 5. During assessment, it was noted that a sum of Rs. 81, 45, 302/- was disbursed by the assessee company as salary to employees working at Bagdad. The Assessing Officer treated the said amount which was deposited in NRE accounts of the employees as salary paid to NRE in India and as no tax was deducted at source on this payment u/s 192, it was held that the amount in question was not a deductible expense within the meaning of Sec. 40 (a) (iii) of the Act. 6. The amount in question was, therefore, included in the income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly if the income was chargeable to tax. He submits that there is no doubt that the employees of the assessee-company were non-resident Indians and their income was credited to their NRE accounts. There is no dispute that they worked in Iraq and earned their income in Iraq for which permission was taken from RBI for payment of 30% in Iraqi Dinar and 70% in US dollars which could be repatriated by them, on their discretion. Due to war, the remittances from Iraq were stopped by the Iraqi Government and thus under a special arrangement, made by Government of India, the company was extended overdrafts and the amount of salary was credited to the NRE account of the employees in India subject of course to the same conditions which were allowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e very Income-tax Act provides that a nonresident Indian, who had rendered services outside India and has also earned there, and if he repatriates part of his earnings to India, then the said earnings will not be subjected to Indian Income-tax Act again as it will amount to double taxation. Hence, in view of the above discussion, we are of the opinion that the alleged disallowance u/s 40 (1) (iii) has been made by completely going on a wrong premise or law and without taking into consideration the basic ingredients that the alleged amount of salary was not chageable to tax in India. The entries, which have been made by the assessee company in his accounts, were only made in the company's establishment at Iraq and it was not a payment of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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