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Issues Involved:
1. Deletion of addition on account of disallowance of proportionate deduction for days on official duty outside India. 2. Deletion of addition on account of estimated salary income not disclosed. 3. Deletion of addition on account of perquisites. 4. Deletion of addition on account of unexplained cash credits u/s 68. Summary: Issue 1: Deletion of Addition on Account of Disallowance of Proportionate Deduction for Days on Official Duty Outside India The Revenue challenged the deletion of Rs. 56,411/- (grossed up to Rs. 86,920/-) made by the A.O. on account of disallowance of proportionate deduction claimed by the assessee for days on official duty outside India. The assessee, a French citizen and employee of Air France, excluded 19 days of salary from taxable income in India, arguing that these days were spent working outside India. The CIT(A) deleted the addition, following the ITAT Special Bench decision in a similar case. The Tribunal upheld the CIT(A)'s decision, stating that the contract of employment recognized the division of work between India, France, and South Asia, and there was no justification for the AO to insist on evidence regarding the nature of services rendered outside India. Issue 2: Deletion of Addition on Account of Estimated Salary Income Not Disclosed The Revenue contested the deletion of Rs. 1,00,000/- (grossed up to Rs. 1,54,083/-) on account of estimated salary income not disclosed by the assessee. The AO had treated contributions to various social security schemes in France as perquisites and added them to taxable income. The CIT(A) deleted the addition, observing that these contributions were mandatory and not at the discretion of the assessee. The Tribunal upheld the CIT(A)'s decision, citing the ITAT Mumbai decision in Gallotti Raoul vs. ACIT, which held that such contributions are a diversion of income by overriding title and cannot be considered income in the hands of the assessee. Issue 3: Deletion of Addition on Account of Perquisites The Revenue also challenged the deletion of Rs. 4,43,196/- (grossed up to Rs. 6,82,891/-) on account of perquisites. The AO had treated contributions to various social security schemes as perquisites. The CIT(A) deleted the addition, following the ITAT Mumbai decision in Gallotti Raoul vs. ACIT. The Tribunal upheld the CIT(A)'s decision, agreeing that these contributions were a diversion of income by overriding title and could not be taxed as income. Issue 4: Deletion of Addition on Account of Unexplained Cash Credits u/s 68 The Revenue contested the deletion of Rs. 1,01,000/- (grossed up to Rs. 1,69,492/-) on account of unexplained cash credits u/s 68. The AO had made the addition, treating cash deposits in the assessee's bank account as unexplained. The assessee explained that the cash deposits were made from cash withdrawals over two years. The CIT(A) deleted the addition, noting that the assessee had sufficient cash balance and was a highly paid employee. The Tribunal upheld the CIT(A)'s decision, stating that the AO could not make the addition without rejecting the cash book supported by bank withdrawals. Conclusion: In the result, both appeals by the Revenue were dismissed. The Tribunal upheld the CIT(A)'s decisions on all grounds, finding no justification for the additions made by the AO.
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