1986 (4) TMI 47 - HC - Income Tax

Summary

Issues:
Interpretation of section 10(6)(vii)(a)(ii) of the Income-tax Act, 1961 regarding exemption of remuneration and perquisites received by a foreign technician working in India under approved contracts with different employers.

Analysis:
The case involved a French technician who worked in India under approved contracts with two different employers, Hindusthan Zinc Ltd. and Durgapur Chemicals Ltd. The primary issue was whether the remuneration and perquisites received by the technician were exempt from income tax under section 10(6)(vii)(a)(ii) of the Income-tax Act, 1961.

The Appellate Assistant Commissioner initially allowed the exemption, holding that the technician's service with Hindusthan Zinc Ltd. was approved by the Government of India, making him eligible for the exemption. The Revenue challenged this decision before the Income-tax Appellate Tribunal, arguing that continuous employment with the same employer was necessary for the exemption and that the technician had worked for two different employers during the relevant period.

The Tribunal, with a dissenting opinion from the judicial member, referred the matter to a third member who agreed with the initial decision, ruling in favor of the technician. The majority view of the Tribunal supported the technician's entitlement to exemption under section 10(6)(vii)(a)(ii) for the remuneration received during the specified period.

The High Court, in its judgment, referred to relevant legal provisions and previous court decisions to support its conclusion. Citing a Bombay High Court decision, the High Court emphasized that the objective of the provision was to attract foreign technicians and grant them tax exemptions, even if they worked for multiple employers with approved contracts. The High Court agreed with this interpretation and held that the technician was entitled to exemption as both his employments were approved by the Government of India.

Ultimately, the High Court answered the question in the affirmative, ruling in favor of the technician and granting the exemption. The judgment highlighted that the technician's services with both employers were approved, making him eligible for the exemption under section 10(6)(vii)(a)(ii) of the Income-tax Act, 1961.

In conclusion, the judgment clarified the interpretation of the relevant legal provision and upheld the technician's entitlement to exemption, emphasizing the approval of contracts by the Government of India as a key factor in determining eligibility for the exemption.