TMI Blog1995 (5) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1991-92 exceeded 183 days. Exemption u/s 10(6) (vii) was not claimed by any of the appellants. The salary paid to the appellants was offered for tax under the provisions of the Income-tax Act, 1961 for the assessment of which the appellants filed the returns of income with the concerned Assessing Officers. In addition to the salary received by the expatriate employees, the Assessing Officer assessed the perquisite value in respect of rent free accommodation, free meals and tax on tax. 3. The appellants appealed to the CIT(A) but without any success. Therefore, the appeals before us. 4. Apart from challenging the decision of the revenue authorities to assess the value of peeks on account of rent free accommodation, free meals and tax on tax, the appellants have challenged the validity of the assessments on the ground that proviso to section 143(2) has been violated in respect of all the appellants. 5. On the basis of the rival contentions and on perusal of the records, we record our findings in respect of the various grounds as under : 6. We shall first take up the legal ground. As already pointed out, the claim of the assessee is that the asst. orders passed u/s 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention that the assessee was raising a new controversy which was beyond the scope of even the grounds of appeal. It was accordingly urged that contentions raised on behalf of the assessee may be dismissed. Without prejudice to the first objection, the learned D.R. contended that the requirement of proviso to section 143(2) is for initiation of proceedings with the issue of notice u/s 143(2). Such a notice has been found to have been issued by the Assessing Officer in each case by the CIT(A) as is evident from first appellate order. The subsequent notice, according to the learned D.R., are only in continuation of first notices. Shri Gupta further contended that there was no bar for issue of opportunity notices from time to time for the purposes of completing the assessment within the period of limitation. Shri Gupta further contended that in any case there was a waiver by the assessees in so far as they participated in the proceedings without any objection before the Assessing Officer. According to the learned D.R., no objection can be raised after the completion of the assessment proceedings regarding the validity of proceedings. 10. We have given our careful consideration to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent notices. At best the subsequent notices can be termed as opportunity notices in continuation to the first notice issued for the purposes of assessment. We do not find any basis for the contention raised on behalf of the assessee that if on the date of hearing, the Assessing Officer does not pass an exparte order, the validity of the notice lapses. There is no such principle of law supported by any authority brought to our notice. 11. Section 129 of the Act relied upon by the learned counsel for the assessee does not advance the case of the assessee. On the contrary it supports the revenue's case. Here notices u/s 143(2) in each case had been issued and served by one Assessing Officer. He had been succeeded by another officer who issued the fresh notices in July 1993. Section 129 provides that whenever in respect of any proceedings under the Act, art income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeded may continue the proceedings from the stage at which the proceeding was left by his predecessor. Under the proviso assessee, however, is given an option to demand that bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, reliance was placed on Notification No. 143E dated 21st February, 1989 which specifies the following allowance to be exempt u/s 10(14)(i) : (a) .......................................................................................................... (b) any allowance whether granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by the employee on account of absence from his normal place of duty. The perquisites on account of rent free accommodation and free meals were also claimed exemption the ground that neither the accommodation nor free meals were provided by the employer. According to the learned counsel, the facility was provided by the Indian company and as such these could not be assessed as perquisites in lieu of salary. 14. The learned D.R., on the other hand, contended that the claim made by the assessee u/s 10(14)(i) was frivolous in so far as no cash allowance was paid to the assessee or assessed to tax by the Assessing Officer. According to the learned D.R. exemption u/s 10(14) is in respect of cash allowances granted for meeting the expenses and actually incurred by the assessee. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodation and free meals could be treated as special allowance granted to the assessee specifically to meet the expenses in performance of their duties. If the said value of the facilities provided to the assessee can be treated as special allowance granted to the assessee then the question arises as to whether such allowances are exempt from tax u/s 10(14)(i) of the Income-tax Act, 1961. The language of section 10(14), in our view, is wide enough to include not only the cash allowances but also any benefit not being in the nature of perquisite within the meaning of clause (2) of section 17 specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, as the Central Government may by notification in the Official Gazette specify. Therefore, the objection raised on behalf of the revenue that section 10(14)(i) is applicable only in respect of cash allowances, in our view, is not well founded. However, in order to consider the claim of the assessee u/s 10(14), it is essential for us to consider as to whether the benefit allowed to the assessee in the form of rent free accommodation and free me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntary act of the Indian company, namely, NFCL. 17. We now refer to section 17(2) which defines 'perquisites'. It reads as under : " 'Perquisites' includes : (i) the value of rent free accommodation provided to the assessee by his employer ; (ii) ........................................................................................................... (iii) the value of any benefit or amenity granted or provided free of cost or at a concessional rate in any of the following cases : (a) ......................................................................................................... (b) .......................................................................................................... (c) by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub clause do not apply and whose income (under the head 'Salaries') (whether due from or paid or allowed by, one or more employers) exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds twenty-four thousand rupees. (The other clauses of section 17(2) are omitted as being irrelevant)." In all the 12 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch perquisites we need not express any opinion as no dispute has been raised in regard to the valuation part of the benefit. We, therefore, confirm the assessment of value of benefits provided to the expatriate employees by way of rent free accommodation and free meals during their stay in India in connection with the NFCL project. 19. We now take up the issue regarding the assessment of tax on tax. We shall have to elaborate the facts relating to this issue. As is clear from the term of the employment as reproduced elsewhere in this order, there was no obligation of Snamprogetti to provide a tax free salary to the assessee. However, NFCL being the Indian company agreed with the Snamprogetti, Italian company, by virtue of clause 3.15 of the agreement to bear all taxes as may be imposed on contractor, sub-contractor, licensor and their personnel for the execution of the work as well as custom duties and charges as may be imposed for the equipment and materials to be temporarily imported in India. In other words, the Indian company agreed to reimburse the taxes imposed, inter alia, on the personnel deputed by the Italian company for the execution of their work in India. It is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income is said to be received when it reaches the assessee ; when the right to receive the income vests in the assessee, it is said to accrue or arise. In this case by virtue of the agreement between the assessee and the Italian company, assessee was absolved from payment of taxes in so far as the obligation was undertaken to be discharged by the Indian company. Therefore, the benefit accrued to the assessee during the year under appeal. Thus, even if the amount of tax had not been deposited during the previous year relevant to asst. year under appeal, the benefit having accrued to the assessee, the same was assessable in the year under appeal, i.e., the year of accrual. We, therefore, do not find any merit in this contention raised on behalf of the assessee. 21. The only other ground in these appeals is relating to levy of interest u/s 234B of the Income-tax Act, 1961. The appellants had raised the specific ground before the CIT(A) denying their liability to the levy of interest u/s 234B of Income-tax Act, 1961. The CIT(A) has not disposed of this ground of appeal though specifically raised. In para 10 of his order, it has been held "other grounds of appeal taken also do not mer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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