1991 (8) TMI 119 - AT - Income Tax

Summary

Issues Involved:

1. Additions as perquisites (Value of Rent-free accommodation, Pocket Money, Free conveyance)
2. Addition by way of grossing up of tax perquisite
3. Interest charged under section 217

Issue-wise Detailed Analysis:

1. Additions as perquisites:

The appellant, an employee of C.E. Power System (USA), was deputed to assist in the erection of a Thermal Power Station in India. The initial income declared was Rs. 3,03,364, revised to Rs. 2,96,107, but the ITO assessed it at Rs. 13,71,673. The CIT(A) partly allowed the appeal. The appellant contested the additions made by the ITO as perquisites, specifically the value of rent-free accommodation (Rs. 7,257), pocket money (Rs. 48,860), and free conveyance (Rs. 1,200).

The appellant did not press the grounds relating to rent-free accommodation and free conveyance, leading to their rejection. The primary contention was regarding the pocket money of Rs. 48,860, paid at Rs. 140 per day. The CIT(A) observed that while food and transport expenses were exempt under section 10(14), the pocket money was for personal expenses and thus taxable. The Tribunal upheld this view, noting that the introduction of sections 2(24)(iiia) and (iiib) with retrospective effect from 1962 expanded the definition of taxable income to include such allowances, confirming the CIT(A)'s findings.

2. Addition by way of grossing up of tax perquisite:

The CIT(A) confirmed the ITO's addition of Rs. 9,02,946 as a tax perquisite. The appellant argued that being a foreign technician with a service contract approved by the Ministry of Industry, the tax paid by the employer should be exempt under section 10(6)(viia). The CIT(A) did not address this exemption claim. The Tribunal noted that section 10(6)(viia) provides exemption for foreign technicians' remuneration up to Rs. 4,000 per month and the tax paid by the employer on excess remuneration. Given the approval by the Ministry and the contractual terms, the Tribunal remanded the issue back to the CIT(A) for reconsideration, instructing a detailed examination of the agreements and the actual tax payments made by the employer.

3. Interest charged under section 217:

The CIT(A) directed the ITO to grant consequential relief regarding the interest charged under section 217, based on the relief granted on the quantum of additions. The Tribunal found no infirmity in this direction, and no further arguments were presented by the appellant's counsel on this matter.

Conclusion:

The appeal was partly allowed for statistical purposes, with the Tribunal confirming some additions and remanding others for further consideration by the CIT(A).