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2011 (9) TMI 397 - AT - Income TaxTaxability of Living allowance granted to employees deputed abroad- Claim of tax credit in respect of tax paid in USA on living allowance under DTAA- Definition of 'Deputation'-Held that:- The living allowance was in the nature of special allowance or benefit specifically granted to meet expenses wholly, necessarily and exclusively in the performance of duties of an Office or employment of profit. Therefore, the living allowance was covered under the provisions of section 2(24)(iiia) and eligible for exemption u/s 10(14)(i). See Hindustan Powerplus Ltd. [2004 (10) TMI 591 - AUTHORITY FOR ADVANCE RULINGS]. Further, it has been clarified that it is not open to the revenue to call for the details of expenses actually incurred unless the specific disallowances were disproportionately high compared to the salary received by them or unreasonable with reference to the nature of the duties performed by the assessee. See Madanlal Mohanlal Narang [2006 (4) TMI 185 - ITAT BOMBAY-J] - Since living allowance is not taxable in India. Therefore, assessee cannot claim tax credit in respect of tax paid in USA on living allowance under DTAA. The term 'deputation' does not mean transfer of employee from one place of duty to another place of duty, rather the persons should be considered to be on tour in connection with official assignment. The basic criteria for deciding, whether a person is on tour or transfer is to examine his place of employment in consequence to the order. Period of stay does not decide whether it is tour or transfer. Impact of the fact that whether FBT has been paid or not - held that:- employer has not paid FBT. - the considerations for eligibility of exemption under section 10(14)(i) are entirely different and nothing turns around on the applicability or non-applicability of the provisions of FBT.
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