1989 (10) TMI 89 - AT - Income Tax

Summary

Issues:
1. Interpretation of conditions under section 10(6)(viia) of the IT Act for exemption.
2. Determination of the residency status of a foreign individual for tax exemption eligibility.
3. Analysis of the waiver provision under the proviso to section 10(6)(viia) by the Government.

Analysis:
The appeal before the Appellate Tribunal ITAT DELHI-A involved the interpretation of conditions under section 10(6)(viia) of the IT Act for tax exemption. The case revolved around a foreign technician whose services were requisitioned by a company in India, and the tax exemption claimed on his remuneration. The two conditions for exemption were: non-residency in India in the preceding four financial years and approval of the service contract by the Central Government. The dispute arose as the technician was in India for a significant period in the financial year 1979-80. The Income Tax Officer (ITO) denied the exemption, citing the technician's residency in India during that year.

Regarding the residency status, the ITO contended that the technician's stay in India during the financial year 1979-80 made him a resident, thus disqualifying him from the exemption. However, the Appellate Tribunal noted that the approval for the service contract was granted after considering all relevant facts, including the technician's presence in India. The Tribunal held that the Government consciously waived the condition of non-residency, as evidenced by the documents submitted by the company requesting exemption under section 10(6)(viia).

The Tribunal further analyzed the waiver provision under the proviso to section 10(6)(viia) and found that the Government had made a conscious decision to waive the residency condition. The documents submitted by the company clearly indicated the technician's presence in India, and the approval was granted after considering this information. Therefore, the Tribunal upheld the decision of the CIT(A) to allow the exemption under section 10(6)(viia) and dismissed the appeal by the Revenue. The judgment emphasized the importance of considering all relevant facts and documents in determining tax exemption eligibility, especially in cases involving foreign individuals working in India.