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TMI Blog2004 (10) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... lar Inc. USA (for short the "Caterpillar-USA") for supplying technical services and assistance of qualified individuals to co-ordinate the activities of the applicant. Pursuant to that agreement one Mr. Steven D. Dickinson, technician (hereinafter referred to as "technician") was deputed by Caterpillar-USA. The applicant paid US$ 115895 per annum to Caterpillar-USA, as fee for technical services, after deducting tax under section 195 of the Act. The technician received his salary in US $117627 from Caterpillar-USA. However, the applicant provided to the technician the following expenses and facilities free of income-tax : (i) Living expenses ₹ 35,000 per month, (ii) Furnished house, (iii) Air-fare and per diem expenses for the rest and recuperation travel once to Hong Kong and twice to Singapore every year, (iv) Home travel once a year to the U.S. for him and his family, (v) Car for official and personal use. On these facts the applicant sought rulings of the Authority on the following questions : (a) Whether, on the facts and in the circumstances of the case, the sum of US $ 115895 paid by the applicant to Caterpillar Inc., USA, is liable to tax under the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come in the hands of Mr. Rodney D. Naron in India ? (d) If the answer to question (c) above is in the affirmative, how are the aforesaid facilities to be evaluated and the basis for such valuation. (e) If the answer to questions (b) and (c) above are in the affirmative would Mr. Rodney D. Naron be eligible for the standard deduction applicable to salaries and/or any other deductions ; and if so the provision of law under which such deduction is to be claimed and the quantum thereof. The applicant in AAR No. 565 of 2002, Mr. Thomas E. Lawrence is a permanent employee of M/s. Caterpillar Asia P. Ltd. (a company incorporated in Singapore, which is also a 100 per cent. subsidiary of Caterpilliar Inc., USA). The applicant was deputed to M/s. Caterpillar Commerical P. Ltd. ("CCPL"), an Indian company which is a wholly owned subsidiary of Caterpillar-USA. In regard to the amounts paid and the facilities provided to the applicant, the following questions are framed for rulings of this authority : (a) Whether, on the facts and in the circumstances of the case, the salary earned by Mr. Thomas E. Lawrence from Caterpillar Asia Private Limited, Singapore, is liable to tax in India under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se applications. He submitted that he would not be seeking rulings on questions Nos. (a), (c), (d) and (g) in AAR No. 562 of 2002 and corresponding questions in the connected applications. It would be useful to refer to the accounting years, period of stay of the technician and his residential status in those years in India with reference to which the questions are to be answered. They are given in the following table : AAR No. 562 of 2002 S. No. Accounting year No. of days the tech nician was in India Remarks 1. 1999-2000 36 The technician was neither a resident nor an ordinarily resident in India ; 2. 2000-2001 247 He was a resident but not an ordinarily resident in India ; 3. 2001-2002 295 He was a resident but not an ordinarily resident in India ; 4. 2002-2003 (the employee left India on 31-10--2003) 307 He was a resident but not an ordinarily resident in India ; AAR No. 563 of 2002 S. No. Accounting year No. of days Mr. Naron was in India Remarks 1. 2001-2002 173 The technician was neither a resident nor an ordinarily resident in India ; 2. 2002-2003 282 He was a bresident but not an ordinar ily resident in India ; 3. 2003-2004 257 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion No. (a) in AAR No. 565 of 2002 are common. On March 15, 2004, we passed an order calling upon the applicant in AAR No. 562 of 2002 to explain as to how it is entitled to advance ruling in view of the amendment of the definition of "advance ruling" and "applicant" by the Finance Act, 2003. The case was listed along with the other two applications. In the table of particulars of the technician in India it is already noted above that the employee was not a resident in India in the accounting year 1999-2000 (assessment year 2000-2001) so for that year the application would be maintainable. Similar orders were passed in the other two cases also. In AAR No. 563 of 2002, it was brought to our notice that in the accounting years 2001-2002 and 2002-2003 relevant to the assessment years in question, the technician was a non-resident and, therefore, the application was maintainable but from the particulars of the number of days given in the table above, it appears that he was not a resident in India only in the accounting year 2001-2002. In AAR No. 565 of 2002 after hearing the applicant therein, it was held that the applicant would not be a non-resident in the only accounting year 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese applications, we can deal with only such questions which relate to the tax liability of a non-resident. Therefore, we have no option but to reject the applications in respect of questions which relate to tax liability of the technicians in the assessment year in which they were residents in India. We shall proceed to pronounce ruling in respect of the tax liability of technicians in the assessment years in which they were non-residents in India in regard to the income arising to them outside India with reference to clause (ii) of sub-section (1) of section 9 of the Act which reads as follows : "9. Income deemed to accrue or arise in India.-(1) The following incomes shall be deemed to accrue or arise in India,-. . . (ii) income which falls under the head 'Salaries' if it is earned in India : Explanation.-For the removal of doubts, it is hereby declared that the income of the nature referred to in this clause payable for- (a) service rendered in India ; and (b) the rest period or leave period which is preceded and succeeded by services rendered in India and forms part of the service contract of employment, shall be regarded as income earned in India." A plain readin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not seriously disputed that the benefits/facilities, which are the subject matter of the aforementioned questions, are covered by the said sub-clauses. What is, however, contended is that payment of special allowance, facility/ benefit are exempted under clause (14) of section 10 of the Act and therefore, cannot be included in the total income of a person. The contention is well founded and is not disputed by the Additional Commissioner and if we may say so "rightly". We shall with advantage refer to the following decisions here : CIT v. S. G. Pgnatale [1980] 124 ITR 391 (Guj). In that case the assessee was an employee of a French company. Pursuant to an agreement entered into by the French company with the Gujarat State Fertilizers Company, he worked in India as a supervisory and advisory assistant. He was paid certain fixed emoluments outside India by the French company. In regard to taxability of the said amounts it was held by a Division Bench of the Gujarat High Court that the living expenses paid by way of reimbursement are not chargeable to tax. CIT v. Goslino Mario [2000] 241 ITR 312 (SC). In that case the Fertilizer Corporation of India (FCI) entered into an agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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