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Issues Involved:
1. Quantum of tax to be paid. 2. Maintainability of the writ petition. 3. Responsibility for tax payment. 4. Correct method of tax calculation. 5. Interpretation of the agreement between the employer and the employee. 6. Directions for refund of excess tax. Summary: Issue 1: Quantum of Tax to be Paid The writ petition concerns the quantum of tax to be paid by the first petitioner, Mr. Frank Beaton, who was an area manager in Delhi for M/s. Qantas Airways Ltd. He received a tax-free salary and rent-free accommodation. The ITO calculated the taxable income for 1971-72 at Rs. 8,33,486 and the tax demand for this period was Rs. 7,37,508. For 1972-73, the salary was computed at Rs. 3,04,311 and the tax demand was Rs. 2,53,764. Issue 2: Maintainability of the Writ Petition The preliminary objection raised was that the writ petition is not maintainable. The court overruled this objection, stating that if tax beyond the legitimate amount has been charged, it constitutes an illegal demand contravening constitutional provisions. Issue 3: Responsibility for Tax Payment The Commissioner argued that the appropriate tax payable was the responsibility of M/s. Qantas Airways Ltd., not the assessee. The court found this argument unfounded and stated that any refund could be directed to M/s. Qantas Airways Ltd. and not Mr. Frank Beaton. Issue 4: Correct Method of Tax Calculation The method of calculation used by the ITO was scrutinized. The court found difficulty in accepting the method used by the Department, which involved grossing up the tax-free salary to determine the taxable amount. The court discussed an alternative method provided by the petitioner, which resulted in a lower taxable income and tax due. Issue 5: Interpretation of the Agreement The court emphasized the importance of interpreting the agreement between the employer and the employee. The agreement stated that the company would pay any local income-tax on the salary and allowances. The court concluded that M/s. Qantas Airways Ltd. was only obliged to pay the tax on the salary and allowances, not the tax on tax. Issue 6: Directions for Refund of Excess Tax The court directed that the tax on the salary has to be paid by M/s. Qantas Airways Ltd. Any additional tax resulting from that payment has to be paid by Mr. Beaton. The refund of excess tax paid would be directed to M/s. Qantas Airways Ltd., provided Mr. Beaton pays his portion of the tax. The court also reserved the liberty for the Department to initiate action if it is found that the company has paid any part of the tax liability of Mr. Beaton. Conclusion: The writ petition was allowed, quashing the assessments made on the petitioner for 1971-72 and 1972-73. The assessments were directed to be redone on the lines indicated by the court. Refund of excess tax was directed to M/s. Qantas Airways Ltd., conditional upon Mr. Beaton paying the tax due from his own funds.
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