1995 (12) TMI 37 - HC - Income Tax

Summary

Issues:
1. Whether foreign technicians can be taxed in India under the Double Taxation Avoidance Agreement (DTAA) between India and Czechoslovakia.
2. Whether the income-tax paid by Bharat Heavy Electricals Limited (BHEL) on behalf of the technicians can be treated as a perquisite.
3. Whether the writ petitions filed by the foreign technicians through BHEL are maintainable under the Income-tax Act.

Analysis:
1. The primary issue in these writ petitions is whether the foreign technicians can be taxed in India under the DTAA between India and Czechoslovakia. The judgment examines the clauses of the agreement regarding taxation of salaries, wages, and similar remuneration derived by residents of the contracting states. It is established that the technicians were residents of Czechoslovakia and were assessed as non-residents in India. The judgment concludes that the remuneration, if any, received by the technicians could not be taxed in India as it fulfilled the conditions specified in the DTAA, thereby exempting their income from Indian tax.

2. The next issue addressed in the judgment is whether the income-tax paid by BHEL on behalf of the technicians can be considered a perquisite. The judgment notes that since the technicians did not have an employer-employee relationship with BHEL, the tax paid by BHEL cannot be treated as a perquisite. However, this issue becomes inconsequential due to the finding that the technicians' income is not taxable in India under the DTAA.

3. The final issue pertains to the maintainability of the writ petitions filed by the foreign technicians through BHEL. The judgment clarifies that under the Income-tax Act, a non-resident can be assessed through an agent. BHEL, as per its agreement with Skoda Export, was obligated to pay taxes on behalf of the technicians, making it the agent of the petitioners. The judgment rejects the contention that the foreign technicians are not interested in the matter and upholds the maintainability of the writ petitions filed through BHEL.

In conclusion, the judgment allows the writ petitions, quashing the assessments made on the petitioners under the Income-tax Act. It orders the refund of tax paid on behalf of the petitioners by BHEL and directs that each party shall bear their own costs.