2002 (2) TMI 914 - AT - Income Tax

Summary

Issues:
1. Exemption on remuneration paid to a non-resident
2. Living allowance exemption and perquisite value inclusion
3. Tax on income borne by a third party
4. Surcharge applicability for non-residents

Exemption on remuneration paid to a non-resident:
The appellant contested the addition to income due to remuneration paid by an Indian company on behalf of an Italian employer. The conditions for exemption under DTAA were analyzed. The appellant's stay in India was less than 183 days, meeting one condition. The remuneration was not paid by an Indian company, and there was no Permanent Establishment in India. The Tribunal cited the CIT v. G.T. Fields case, allowing the exemption under section 10(6)(v) of the Act. Consequently, the salary paid to the appellant was deemed exempt in India, leading to the deletion of the additions sustained by the CIT (Appeals).

Living allowance exemption and perquisite value inclusion:
The appellant challenged the addition related to living allowance and perquisite value. The Supreme Court decision in CIT v. Gaslino Mario supported the exemption of living allowance under section 10(14) for foreign technicians. Additionally, the Delhi Bench decision in Mr. A Crosetto's case favored the appellant regarding the perquisite value inclusion. Consequently, both additions were deleted based on the decisions of the Tribunal and the Supreme Court.

Tax on income borne by a third party:
The issue revolved around the inclusion of tax on the appellant's income borne by a third party under section 195A. The Tribunal noted that the appellant's stay was less than 48 months, making him eligible for exemption under section 10(6)(viia). The employer had already borne the tax, further supporting the appellant's entitlement to exemption. Thus, the appellant was not liable to include the income borne by the third party in his income under section 195A, leading to the allowance of this ground.

Surcharge applicability for non-residents:
The final issue concerned the applicability of surcharge for non-residents. The Tribunal clarified that no surcharge is applicable to non-residents as per the Finance Act, 1988. Since the appellant was a non-resident, the Assessing Officer erred in levying surcharge on the income tax. Consequently, this ground was also allowed, resulting in the overall allowance of the appellant's appeal.