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2016 (2) TMI 839 - ITAT DELHI

2016 (2) TMI 839 - ITAT DELHI - TMI - Entitlement to exemption under section 10 (8) - CIT(A) deleted the addition - Held that:- As per the conditions prescribed in section 10 (8), the project Samastha which the employer of the assessee stems from the agreement between the Indian and the foreign State USA by virtue of agreement dated 30.09.1992 and the terms of the agreement specifically exempts income of the personnel working with the USAID Project as required by the section 10(8) of the Act and .....

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refore, we uphold the order of the CIT (A) and dismiss the appeal of the revenue. - Decided in favour of assessee - ITA No. 3870/Del./2013 - Dated:- 24-2-2016 - Shri J. S. Reddy, Accountant Member And Shri A. T. Varkey, Judicial Member For the Petitioner : Shri Vinod Kumar Goel, Advocate For the Respondent : Shri Manoj K. Chopra, Senior DR ORDER Per A. T. Varkey, Judicial Member This appeal, at the instance of the revenue, is filed against the order of the CIT (Appeals), Meerut dated 04.03.2013 .....

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alify for the exemption as claimed by the assessee. For the sake of clarify, the relevant portion of the order of the ld. CIT (A) is reproduced hereunder :- 2.3 The exemption under Section 10(8) of the Act is admissible to an individual who is assigned to duties in India in connection with any cooperative technical assistance program or project in pursuance of an agreement between the Governments of India and USA. Two other conditions are that the terns of the agreement should provide for the ex .....

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goods, services, training and contractor personnel financed by the grant or provided by A.I.D/Washington will be exempt from any taxation, duties 0] fees imposed under laws in effect in the territory of India. The specific project under the agreement in connection of which the assessee appears to have rendered services is the Innovation in Family Planning Services (IFPS). The IFPS project was originally designed in 1992 to assist the Indian government in revitalizing family planning services usi .....

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details submitted, it appears that the prime contractor in the said project was Constella Futures International and Engender Health, the employer of the assessee, was a subcontractor. However, the said party was a subcontractor specifically for the IFPS II project. Under the circumstances, it does appear that the assessee was working on a project which was funded by the USAID. That being so, it can also not be said that the assessees remuneration was not indirectly paid by the USAID. In the ass .....

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on 8A was intended to extend the benefit of section 10(8) to multilateral agencies such as the World Bank. Certainly, USAID cannot be termed as a multilateral agency. Further, the relevant agreement categorically provides exemption not only to goods, services, training but also to the, contractor personnel. If the prime contractor has subcontracted part of the work to a subcontractor, the personnel of such subcontractor, who is deployed on the project being implemented in terms of the intergover .....

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. Nevertheless, there is a categorical finding by the CIT (A) that "the remunerations had been received by the assessee in pursuance of project under the Cooperative Technical Assistance Program and the project was a result of an agreement entered into by the governments of India and the USA for innovation in family planning services. The clauses of the agreement provides for exemption of remuneration from taxation. Since all the conditions are satisfied, there is no doubt that the income/r .....

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in order to qualify exemption u/s 10 (8) of the Act it had to be for cooperative technical assistance programme and the employer of the assessee did not had any agreement directly with the US Agency for International Development (USAID) and that agency which had direct agreement was Constella Futures International, LLC and since the employment of the assessee was with a sub-contractor it does not qualify for exemption u/s 10 (8) of the Act. The ld. DR pointed out that employer of the assessee E .....

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assessment years 1999-00 and 2000-01 and took our attention to pages 11 to 14 of the paper book. He further submitted that this fact was brought to the notice before the AO, however, he brushed aside the order of the ITAT stating that res judicata is not applicable to the income-tax proceedings. The ld. AR brought to our attention the agreement between the US Government and the Indian Government, which is placed at page 15 to 29 of paper book, and letter from USAID for tax exemption at pages 30 .....

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ction 10 (8) of the Act which reads as under :- 10(8) In the case of an individual who is assigned to duties in India in connection with any co-operative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause)- (a) the remuneration received by him directly or indirectly from the Government of that foreign State for such duties, and ( .....

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which is in accordance with the agreement entered into by the Central Government and a foreign State and in the said agreement between the two countries, the terms for exemption are provided as per the requirement of this section i.e. section 10 (8) of the Act. On the perusal of the records, we find that the assessee is employed by Engender Health previously known as AVSC International which is an international non-Government organisation and a not for profit organisation approved by USAID to w .....

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