1997 (10) TMI 391 - AAR - Income Tax

Whether in the facts and circumstances explained in detail in annexure-I the applicant is a qualified technician as defined under section 10(5B) of the Income-tax Act 1961 and accordingly the applicant would be entitled to the exemption under section 10(5B)?

Summary

Issues Involved:
1. Whether the applicant is a qualified technician as defined under section 10(5B) of the Income-tax Act, 1961.
2. Whether the applicant is entitled to the exemption under section 10(5B) of the Income-tax Act, 1961.

Detailed Analysis:

1. Whether the applicant is a qualified technician as defined under section 10(5B) of the Income-tax Act, 1961:

The applicant, a Swedish national employed by Telia Swedtel AB, was deputed to India to oversee the establishment of a digital cellular telecommunication network for JT Mobiles Limited (JTM). The applicant's qualifications include a diploma in telecommunication engineering and electronics, along with specialized training in microwave engineering, propagation and antenna technology, and mobile communication. He has 23 years of practical experience in telecommunications.

Section 10(5B) of the Income-tax Act provides an exemption for individuals rendering services as a technician in India, given certain conditions are met. The term "technician" is defined to include persons with specialized knowledge and experience in fields specified by the Central Government. The relevant notification includes "information technology" as one of these fields.

The Department argued that "information technology" should be narrowly interpreted to relate only to computer systems and software. However, the Authority found this interpretation too restrictive. It referenced Longman's Dictionary, which defines "information technology" as involving both computer systems and telecommunications. The Authority concluded that the cellular network, being a medium for disseminating information through a system of computers, falls within the scope of "information technology."

Thus, the Authority determined that the applicant meets the definition of a "technician" under section 10(5B) and the relevant notification.

2. Whether the applicant is entitled to the exemption under section 10(5B) of the Income-tax Act, 1961:

To qualify for the exemption under section 10(5B), the following conditions must be met:
(a) The individual must be a "technician" as defined.
(b) The individual must be employed in a business carried on in India.
(c) The individual must not have been resident in India in the four financial years preceding their arrival in India.
(d) The individual's salary must be tax-free, with the employer agreeing to pay the tax on the remuneration.

In this case, conditions (b), (c), and (d) were undisputed. The applicant was employed by JTM, had not been a resident in India in the four preceding financial years, and had a tax-free salary arrangement with Telia. The only contested issue was whether the applicant qualified as a "technician."

Given the Authority's conclusion that the applicant is a "technician" under section 10(5B), it follows that he is entitled to the exemption provided by this section.

Ruling:

1. In the facts and circumstances explained in detail in annexure-I, the applicant is a qualified technician as defined under section 10(5B).
- Yes

2. The applicant would be entitled to the exemption under section 10(5B).
- Yes