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Allahabad High Court · body

2005 DIGILAW 220 (ALL)

Commissioner of Income Tax v. De Marche Enrico

2005-02-07

G.P.SRIVASTAVA, R.K.AGRAWAL

body2005
( 1 ) THE Tribunal, Allahabad, has referred the following question of law under Section 256 (1) of it Act, 1961, hereinafter referred to as the Act, for opinion to this Court: "whether the Tribunal was correct in law in holding that the assessee is entitled to the benefit claimed by him under Section 10 (6) (viia) of the IT Act, 1961, in respect of the salary, including perquisites received by him ?" the present reference relates to the asst. yr. 1979-80. ( 2 ) BRIEFLY stated the facts giving rise to the present reference are as follows : the respondent-assessee is a foreign national and an employee of M/s Technimont of Italy. M/s j. K. Synthetics Ltd. had entered into an agreement for some technical collaboration with the italian firm in pursuance of which the said firm had deputed the respondent-assessee for doing some technical work in India with M/s J. K. Synthetics Ltd. The assessment was completed under section 143 (3) of the Act on 25th March, 1985 on a total income of Rs. 1,35,440. The respondent-assessee had claimed that he is not liable to tax as the amount is exempt under section 10 (6) (viia) of the Act. The plea was negatived by the assessing authority. Feeling aggrieved, the respondent-assessee preferred an appeal before the CIT (A), who had upheld the decision of the assessing authority on the following grounds : "since the appellant cannot be said to be in the employment of either Government or the local authority or any corporation set up under special law or any institution established for carrying on scientific research, this benefit cannot be given to the appellant. The appellant might claim benefit by writing the words in any business carried on in India. in my opinion the appellant would not be entitled to it for two reasons. In the first instance the word of has been used for the employment of the technicians by the concerned employer, i. e. , of the Government or a local authority or any corporation or any such institution and hence the words in any business would not be in conformity with the reading of the section. In the first instance the word of has been used for the employment of the technicians by the concerned employer, i. e. , of the Government or a local authority or any corporation or any such institution and hence the words in any business would not be in conformity with the reading of the section. Secondly, as per appellants own claim while dealing with the first objection where the entire income was claimed to be exempt, it has been claimed on behalf of the appellant, that the appellant was not an employee of M/s J. K. Synthetics; it was claimed that the appellant was an employee of M/s technimont of Italy and he was rendering services in India on account of agreement of M/s J. K. Synthetics with M/s Technimont and hence he was in employment of Italian concern and instead of him any other person could have been sent by M/s Technimont to do the job for M/s J. K. Synthetics Ltd. This would mean that the appellant was not a technician who was in the employment of M/s J. K. Synthetics Ltd. which is carrying on business in India. In these circumstances, I am of the opinion that the appellant is not entitled to the benefit claimed by it at the rate of Rs. 4,000 per month under Section 10 (6) (viia ). Hence this objection is also dismissed. " ( 3 ) STILL feeling aggrieved the respondent-assessee filed second appeal before the Tribunal. The tribunal has accepted the claim put forward by the respondent-assessee and had held that the respondent-assessee is entitled to exemption under Section 10 (6) (viia) of the Act. While holding so the Tribunal has followed its decision of Ahmedabad Bench in the case of E. Battelli v. ITO (1986) 26 TTJ (Ahd) 96 : (1986) 16 ITD 652 (Ahd ). We find that the Tribunal has held that it is not necessary that the foreign firm should carry on any business in India or the assessee was not an employee of the Indian firm. On undisputed fact the assessee having specialised knowledge and experience had actually used the same in constructional or manufacturing operation of the indian firm which carries on business in India. ( 4 ) WE have heard Sri Shambhoo Chopra, learned standing counsel for the Revenue and, Sri R. S. Agrawal, learned counsel for the respondent-assessee. On undisputed fact the assessee having specialised knowledge and experience had actually used the same in constructional or manufacturing operation of the indian firm which carries on business in India. ( 4 ) WE have heard Sri Shambhoo Chopra, learned standing counsel for the Revenue and, Sri R. S. Agrawal, learned counsel for the respondent-assessee. ( 5 ) LEARNED standing counsel submitted that according to the own case of the respondent-assessee he was not in employment of M/s J. K. Synthetics Ltd. , therefore, no benefit of exemption as provided under Section 10 (6) (viia) of the Act is available. ( 6 ) SRI R. S. Agrawal, learned counsel for the respondent-assessee submitted that as the respondent was deputed to perform the contractual obligation entered into between Italian firm and M/s J. K. Synthetics Ltd. , he would be deemed to be in employment of the Indian firm and, therefore, entitled for exemption under Section 10 (6) (viia) of the Act. ( 7 ) HAVING heard the learned counsel for the parties, we find that under Section 10 (6) (viia)exemption is available to a person who renders service as a technician and who is in employment of the Government or of a local authority or of any corporation set up under any special law or of any such institution or body established in India for carrying on scientific research as is approved for the purpose of that clause by the prescribed authority or in any business carried on in India and such individual was not resident in India in any of the four financial years immediately preceding the financial year in which he arrived in India then the remuneration due to or received by him, which is chargeable under the head "salaries" for services rendered is exempt. During the relevant period it was at the rate of Rs. 4,000 per month. ( 8 ) THUS, the precondition is that the claim under Section 10 (6) (viia) of the Act is that such individual should be in the employment for carrying on scientific research or in any business carried on in India. In the present case the scientific research was being carried on by M/s J. K. Synthetics Ltd. Under an agreement with the Italian firm the respondent was deputed to perform the work. In the present case the scientific research was being carried on by M/s J. K. Synthetics Ltd. Under an agreement with the Italian firm the respondent was deputed to perform the work. It is the own case of the respondent that he was not an employee of the Indian firm but the employee of the Italian firm and, therefore, it cannot be said that he was in employment with the Indian firm for the business carried on with the said firm. Thus, exemption under Section 10 (6) (viia) of the Act was not available. ( 9 ) IN view of the foregoing discussion, we are of the considered opinion that the Tribunal has committed an error in holding that the exemption under Section 10 (6) (viia) is available. We, accordingly, answer the question referred to us in the negative, i. e. , in favour of the Revenue and against the assessee. However, there shall be no order as to costs. . .