TMI Blog1987 (2) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 115 per calendar day. S/Shri K. B. Macoundeen, R. L. Waldren and G. E. Hawn were to get living allowance @ Rs. 115, Rs. 150, and Rs. 116 per calendar day, respectively. The amount of living allowance received by the assesses was shown by them in their return of income, and was treated by the ITO as part of their income, and was assessed accordingly. Dissatisfied with that order, the assessee went up in appeal before the CIT (A), who by the impugned orders held that living allowance was only reimbursement of the expenses and was, therefore, not 'income'. In coming to that conclusion, he had followed the case of CIT v. S. G. Pgnatale [1980] 124 ITR 391 (Guj.). Aggrieved by that order the revenue has come up in appeals before us and has set up the following grounds, which are common to all the appeals: (a) Learned CIT (A) failed to appreciate that the assessee himself has treated the living allowance as his income and had offered it for taxation. (b) Learned CIT (A) erred in entertaining a new plea without giving an opportunity to the ITO when no such plea was taken before the ITO. (c) Learned CIT (A) failed to appreciate that the decisions relied upon by his have been nullif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner (Appeals) had erred in entertaining a new plea without giving an opportunity to the ITO, when no such plea was taken before the ITO. We find no force in this ground of appeal as well. Paper No. 15 of the assessee's paper book is the copy of the grounds of appeal, which had been raised before the Commissioner (Appeals). The assessee had specifically challenged the assessment of the living allowance received by him. An appeal is heard only after issuing notice to the respondent. The respondent is also served with the grounds of appeal. It has not been suggested that the grounds of appeal raised before the Commissioner (Appeals) had not been served on he ITO or he was not served with the notice of hearing. In the circumstances, it would be reasonable to hold that the ITO was aware of the grounds raised by the assessee in the appeal before the CIT (Appeals) and he had been provided ample opportunity to make his submissions before the First Appellate Authority. In view of these facts it is not possible to hold that no opportunity had been provided by the Commissioner (Appeals) to the ITO on the point. 6. Coming to the merits of the case, the learned departmental repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every person. Section 5(2) relates to the income of a non-resident and the said section reads as follows: "Subject to the provision of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which-- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1: Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2: For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India." It would be relevant to quote section 9(1)(ii) of the Act on which reliance has been placed by the revenue. The said section, so far as relevant for purposes of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, to the extent to which such expenses are actually incurred for that purpose. Explanation: For the removal of doubts, it is hereby declared that any allowance granted to the assessee to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides shall not be regarded, for the purposes of this clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties." In view of the Explanation to clause (14) of section 10 the amount of living allowance cannot be regarding as a special allowance or benefit within the meaning of that clause, or reimbursement of the expenses incurred by the assessee in performance of his duties. 10. We also find that the case of S. G. Pgnatale is not at all applicable to the facts of the present case. That was a case relating to the assessment year 1972-73. Learned departmental representative had rightly pointed out, that Explanation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his salary. These facts lead us to believe that it was a part and parcel of his salary, which has accrued and arisen in India and is, therefore, assessable as such. 11. The Tribunal's order dated 29th October, 1985, already referred above, and relied on behalf of the assessee, is also in our view, of no assistance to the assessee. In those cases also the assessees were foreign nationals and employees of a foreign company. They were to get their salary by their employers in U.S.A. Only the living allowance was payable directly to the assessees by IFFCO. In those circumstances, the Tribunal had held that the salary paid to the said assessee outside India cannot be treated to have been earned in India in terms of section 9(1)(ii) of the IT Act and is exempt under section 10(14) of the Act. The Tribunal had also observed that the Explanation added to section 9(1)(ii) of the said Act is also not applicable to the assessment year to which the appeals relate. On the facts of those cases, the Tribunal had also found that the assessees were employed by the foreign company outside the country and their ordinary residence was outside India and it cannot be said that their ordinary place of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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