1993 (2) TMI 33 - HC - Income Tax

Issues Involved:
1. Calculation of expenditure u/s 37(3) read with rule 6D for each employee.
2. Jurisdiction to entertain additional ground for surtax liability deduction.
3. Timeliness of raising additional ground regarding surtax liability.
4. Deductibility of leave travel expense for a foreign employee.
5. Applicability of rule 6D(2) for travel in India by foreigners with headquarters outside India.
6. Perquisites allowed to a foreign employee and their coverage u/s 40(a)(v).

Summary:

Issue 1: Calculation of Expenditure u/s 37(3) read with Rule 6D
The Tribunal's decision on the calculation of expenditure for each employee with reference to each trip period was not addressed due to the smallness of the amount involved.

Issue 2: Jurisdiction for Surtax Liability Deduction
The Tribunal erred in holding that it did not have jurisdiction to entertain the assessee's additional ground for deduction of surtax liability. This issue is covered by the decision in Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 [FB], in favor of the assessee. The court answered in the affirmative, favoring the assessee.

Issue 3: Timeliness of Raising Additional Ground
The Tribunal erred in holding that the assessee acted belatedly in raising the additional ground regarding the deductibility of surtax liability. This issue is also covered by the decision in Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 [FB], in favor of the assessee. The court answered in the affirmative, favoring the assessee.

Issue 4: Deductibility of Leave Travel Expense
The Tribunal erred in holding that the leave travel expense of Rs. 8,514 incurred for Mr. Richardson and his family was not wholly and exclusively for business purposes. The court found that since Mr. Richardson had completed his assignment within the stipulated two years, the expenditure should be allowed. The court answered in the affirmative, favoring the assessee.

Issue 5: Applicability of Rule 6D(2) for Foreigners
The Tribunal erred in holding that rule 6D(2) was applicable for travel in India by foreigners whose headquarters were not in India. The court held that the provisions of rule 6D(2) would be applicable in such cases. The court answered in the negative, against the assessee.

Issue 6: Perquisites Allowed to Foreign Employee
The issue raised by the Revenue regarding the perquisites allowed to Mr. G. T. Richardson being covered by section 40(a)(v) was resolved in favor of the assessee, following the decision in CIT v. Borosil Glass Works Ltd. [1986] 161 ITR 286. The court answered in the affirmative, favoring the assessee.

Conclusion:
The court provided answers to the issues based on existing precedents and interpretations of relevant statutory provisions, favoring the assessee in most instances except for the applicability of rule 6D(2) for foreigners. No order as to costs.

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