1992 (8) TMI 95 - AT - Income Tax

Summary

Issues:
1. Taxability of amount received by the assessee in India under section 5 of the Income Tax Act.
2. Admission of fresh evidence regarding accrual of overtime allowance in a foreign country without giving an opportunity to the Income Tax Officer.

Analysis:

Issue 1: Taxability under section 5 of the Income Tax Act
The appeal by the Department raised the issue of taxability of an amount of Rs. 85,328 received by the assessee in India. The Income Tax Officer noted that the assessee was deputed on a foreign assignment by a company, where the cost of deputation was borne by another company. The assessee received the amount in question from his employer in India, which was remitted by a foreign company. The Income Tax Officer contended that this amount constituted the assessee's income received in India during the previous year and was taxable under section 5 of the Income Tax Act.

The CIT(A) considered the matter in detail, taking into account the agreement between the foreign company and the assessee, and the working provided for quantification of the amount received as overtime allowance. The CIT(A) held that the amount pertained to the financial year 1979-80 when the assessee was a non-resident, making the amount not taxable in that year. Even under section 15(c), the overtime allowance earned in a foreign country by a non-resident was not taxable in the year of receipt, which was the assessment year 1983-84.

Issue 2: Admission of Fresh Evidence
The Departmental Representative argued that the CIT(A) should not have accepted fresh evidence regarding the overtime allowance without giving the Income Tax Officer an opportunity to respond. However, the CIT(A) found that the information requested by the Income Tax Officer regarding tax deduction at source in the USA was irrelevant and absurd. The CIT(A) accepted the contentions raised by the assessee and verified the factual aspects herself. The appellate tribunal agreed with the view that the amount earned outside India in the financial year 1979-80 by a non-resident assessee was not taxable, even when received in India through the employer in a subsequent year.

In conclusion, the Departmental appeal was dismissed based on the findings that the amount received by the assessee in India was not taxable under section 5 of the Income Tax Act, considering the relevant facts and legal provisions.