9911796707
TMI Blog1988 (11) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... Asstt. Superintendents, Engineers, Chemists Sw. Frs. 540 Other technical personnel Sw. Frs. 480 The above rates are per day of the personnel's absence from their normal place of work. The personnel were to be provided with air tickets and excess baggage vouchers for travel from their place of work in Europe to their place of assignment in the GSFC in India and return. If the stay was to be for more than 6 months the technician was permitted to bring his wife and minor children. Further, the GSFC was to reimburse out of pocket expenses incurred by the personnel during their stay in India not exceeding Rs. 200 per day. However, if GSFC provided adequately furnished proper residential accommodation to such engineers mentioned in the agreement. The agreement also provides that the personnel shall be such persons who qualify for exemption available to foreign technicians under the Indian IT Act. But if these personnel are required to pay any Indian Income-tax the GSFC shall reimburse the tax amount. 2. The ITO noted that Inventa had actually paid to the said personnel amounts which were much smaller than those which it had received from GSFC in respect of these personnel. The ITO n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 2626 and 2628 in the case of these very personnel. Therefore, this contention is rejected. 5. The next contention was that s. 9(1)(i) or (ii) were not applicable because there was no employer-employees relationship between the GSFC and the foreign personnel. Relying upon the decision dated 30th April, 1987 of the Hyderabad Bench of the Tribunal in the case of Flores Gunther & Ors. vs. ITO (1987) 29 TTJ (Hyd) 392 : (1987) 22 ITD 504 (Hyd), it was argued that there was no debit-credit against the GSFC and the foreign personnel had no right to sue the GSFC in respect of the payment received abroad. On behalf of the Revenue it was first of all explained that although the ITO and the Commissioner (A) had mentioned s. 9(1)(i) they actually meant s. 9(1)(ii) because that was obvious from the contents particularly by reference to the Expln. which was attached only to sub-cl. (ii). The learned Departmental Representative referred to the Tribunal's decision in the case of Flores Gunther and pointed out that the definition of salary under s. 17 was very wide and that it was not necessary that the employer should be Indian. 6. In the assessee's grounds of appeal it has been stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable because those cases were covered by sub-cls. (vi) and (vii) of s. 9(1) which applied to agreements executed prior to 1st day of April, 1976. The second part of this decision is that even for other case which relate to asst. yr. 1980-81 s. 9(1)(ii) is not applicable because ss. 9(1)(vi) or 9(1)(vii) are applicable. The Tribunal has noted that the said provisions applied only to agreement executed prior to 1st day of April, 1976. The Tribunal has further held that in view of the Double Taxation Agreement between India and the foreign countries concerned, the payments were not taxable. Now, first of all the assessment year here is 1982-83 and, therefore, the above decision of the Tribunal in the case of Flores Gunther which was concerned with the asst. yr. 1979-80 is not applicable. It is on that basis that the Tribunal in that case has ruled out the application of the Expln. Secondly, there is no question of applying sub-cls. (vi) and (vii) of s. 9(1) because the agreement here has been executed in September, 1976 i.e. subsequent to 1st day of April, 1976. It is not the assessee's case that the proposal in relation to that agreement was approved by the government before that da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular status" at page 400. Earlier in the judgment it has been stated that the narrower meaning of the word "earned" is rendering of services. It is clear that by the Expln. the legislature has said that it is the narrower meaning which has to be adopted. Thus the decision in Pgnatale's case actually goes against the assessee. 9. The next ground is regarding the value of certain perquisites which have been added by the ITO and confirmed by the Commissioner. The first one is in respect of travelling expenses. The Commissioner has confirmed it, stating that these were reimbursement of expenses incurred by the foreign technicians. The next perquisite which has been added is the personal use of telephone and family accommodation and the last one is the value of extra baggage. The assessee's representative before us stated that the company had not made any payment for travelling expenses or provided any telephone to the foreign technicians and not incurred any expenditure for extra baggage except in the case of the assessee Mr. Morf Ernst for Rs. 4,708 whereas the ITO has estimated it at Rs. 5,000. 10. Now, the ITO had written to the GSFC on 15th March, 1985 asking for details on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he extent of Rs. 4,708 had been paid. The ITO has added Rs. 5,000 on that account but we sustain the addition only to the extent of Rs. 4,708 and the balance is deleted. In the assessee's appeal the ground regarding grossing up is not pressed and is accordingly rejected. 12. The assessee's last ground is regarding the charging of interest under s. 215. Its grievance is that the Commissioner has not decided this ground. We find that the ground was taken before the Commissioner and the GSFC is justified in that grievance. Therefore, on this point, the matter is restored to the Commissioner to decide that ground according to law. 13. In the result, the assessee's appeals are partly allowed. 14. In the Department's appeals there is only one ground viz. that he Commissioner has erred in treating the living allowance as exempt. The foreign technicians were entitled to be paid at a rate not exceeding Rs. 200 per day when posted at the plant and not exceeding Rs. 300 per day if they were posted at Bombay or New Delhi. However, they were provided with a residential accommodation of the company and charges in respect thereof were recovered from them. The Commissioner has observed as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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