1984 (11) TMI 51 - HC - Income Tax

Summary

Issues involved: Interpretation of section 80RRA of the Income-tax Act, 1961 regarding deduction of remuneration received by an individual in foreign currency for services rendered outside India.

Summary:
The petitioner, referred to as a technician, entered into an agreement with a foreign employer for remuneration in foreign currency for services rendered outside India. The Central Government refused approval for the petitioner's employment under section 80RRA, stating that the petitioner's status was that of a consultant and not an employee, thus ineligible for the deduction. The petitioner sought to quash this decision and obtain approval under section 80RRA.

Petitioner's Argument:
The petitioner's counsel argued that section 80RRA does not specifically require the individual to be an employee to avail the deduction, unlike other sections of the Income-tax Act. Therefore, the section covers consultants receiving remuneration for services outside India.

Union of India's Argument:
The Union of India's counsel contended that only individuals in an employee status are entitled to the benefit of section 80RRA, emphasizing the restriction to individuals and referring to legislative notes supporting this interpretation.

Judgment:
The Court held that section 80RRA allows for deduction of remuneration for services rendered outside India, without explicitly requiring the individual to be an employee. The term "employer" in the section includes parties retaining consultants, and the benefit is not limited to employees receiving salary as remuneration. As the Government's refusal was based on an incorrect interpretation, approval for the petitioner's agreement under section 80RRA was mandated. The Court did not delve into the alternate argument regarding the petitioner's employment status. The petition was granted, and no costs were awarded.

Conclusion:
The Court's interpretation of section 80RRA affirmed the eligibility of consultants receiving remuneration for services outside India for the deduction, irrespective of their employee status. The judgment directed the Government to approve the petitioner's agreement under the section, highlighting the broad scope of the provision beyond traditional employment scenarios.