TMI Blog1988 (9) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... his employment and services. The first letter read as below : "We take pleasure in confirming your appointment as our sole resident representative in India, as per the discussions you had with our Managing Director. Your services will be available for this company and other associate organizations. Your appointment shall be initially for a period of five years and the nature of duties shall be to look after our interests in this part of the world which would necessitate extensive travelling for business contacts. For the services rendered by you, you would be compensated at the rate of DM 500 - per month." On the same date, another letter was written to the assessee the contents of which were as below : "Dear Sir, A car will be sent to you for performing your official duties. We confirm that the landed cost of the car including customs duty will be borne by us in foreign exchange." In accordance with the terms contained in the second letter dated 28-3-1980, a Mercedes Benz car was sent to the assessee sometimes in September 1981 by M/s. R E Collections, West Germany. The import licence for importing the said car was issued on 27th July, 1981 in favour of S. Charanjit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed form for Rs. 2 lakhs. A fixed deposit receipt of the value of Rs. 50,000 belonging to the assessee was also given as security to the Bank which executed the Bond for and on behalf of the assessee. 4. The said car suffered from various problems and could not be of much use to the assessee and it appears that the assessee wrote to M/s. R E Collections in this regard. The said R E Collections wrote to the assessee on 5-9-1983 as follows : "From the various letters you wrote to us on the subject, it is evident that the aforesaid car is giving lot of problems, first with the fuel injection and presently with the ABS brake system being faulty. Since the car has not been functioning properly, resulting in inconvenience in the discharge of duties, we would request you to have the car shipped back to Germany." The car was ultimately shipped back to M/s. R E Collections in February/March 1984 after obtaining permission to re-export the Mercedes Benz car from the Chief Controller of Exports vide his letter dated 3-2-1984 placed on record. 5. The car thus remained in the possession of the assessee from September 1981 to February/March 1984. Whether during this period the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28(iv) of the IT Act, 1961. He was considerably influenced by the re-export of the car by the assessee to M/s R E Collections, West Germany on being found as non-operable on account of built-in manufacturing defects. He felt that if the car had in fact been given over to the assessee without any charge to him as part of the terms and conditions of the service, the said employer would have sent another Mercedes Benz car for his use. Inasmuch as, it had not been done, it could not be accepted as a fact that the car was given to him for his personal benefit and ownership. The following observations were, inter alia, made by him while holding as above : "The appellant is not the proprietor or the owner of the car merely because, the car was registered in his name when landed in the country, specifically in view of the condition of services between the principals and the appellant as the agent as well as the condition laid down in the Import Control Order as well as the fact that the car was re-exported without getting any substitute for the same. The addition of Rs. 6,66,776 therefore, stands deleted. The appellant gets relief of Rs. 6,66,776." 8. It is against the aforesaid find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the car belonged to the foreign company and not to the assessee and when it could not perform the functions which it was supposed to perform, it was returned by the assessee to the original owner. To hold in the aforesaid circumstances that the assessee was the owner would be to ignore the other relevant facts. It was, therefore, prayed on behalf of the assessee that we should uphold the order of the learned CIT (Appeals). 10. We have given careful consideration to the facts of the case and the rival submissions. Prima facie, the car was supplied by R E Collections, West Germany to the assessee as per the terms of his employment. It is quite understandable that payment of 500 DM per month would not be adequate consideration for availing the services of such an eminent industrialist as S. Charanjit Singh, that something more would have had to be offered to him by way of recompense and as such there is merit in the argument of the learned DR when he points out that the other recompense was the free use of the Mercedes Benz car by S. Charanjit Singh in India. Primarily the car was to be used for the purposes of the business of the said firm but apparently there was no means to che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ship the car all the way from Germany to India to enable the assessee to use it but in point of fact it appears that the said car could not be used at all on account of manufacturing defects and was, therefore, ultimately shipped back to Germany. When this is the state of facts, we are unable to hold that the assessee could or in fact did derive any benefit from the use of the said car. It was originally intended that he should have benefit of it but in fact he could not have the benefit of it. When no benefit is derived apparently, there could be no perquisite in terms of sec. 28(iv) of the Income-tax Act, 1961. The learned CIT (Appeals) was, in the circumstances, in our opinion, justified in deleting the addition in question. 13. The learned DR had laid great stress on the fact that the assessee had got the car registered in his name and that the assessee had to execute a Bond as desired by the Chief Controller of Exports Imports and that in that connection, he had pledged as security his FDR of Rs. 50,000 and that he would not act as above unless he was the owner of the car. The above factors are no doubt relevant to judge the reality of the situation but are not, in our o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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