1988 (10) TMI 74 - AT - Income Tax

Summary

Issues:
1. Standard deduction under s. 16(1) of the IT Act, 1961.
2. Exclusion of remuneration under s. 10(6)(viia) for foreign technicians.

Standard Deduction under s. 16(1) of the IT Act, 1961:
The case involved two foreign technicians employed by an Indian company, Krishak Bharati Cooperative Ltd. (KRIBHCO). The primary dispute was regarding the standard deduction under s. 16(1) of the IT Act. The Income Tax Officer (ITO) contended that as the employer provided a car perquisite to the technicians, the deduction should not exceed Rs. 1,000, and further reduced the deduction proportionately based on the period of employment. The Assessing Officer's decision was upheld by the Appellate Authority. The technicians argued that the car was provided solely for work-related transport, not personal use, and thus the standard deduction should not be limited to Rs. 1,000. However, the employer's certificate indicated a specific value for the car facility perquisite, suggesting personal use. The tribunal found no evidence to support the technicians' claim and restricted the standard deduction to Rs. 1,000 each, rejecting the proportional reduction by the authorities as unjustified.

Exclusion of Remuneration under s. 10(6)(viia) for Foreign Technicians:
The second issue revolved around the exclusion of remuneration under s. 10(6)(viia) for the foreign technicians. The section allowed for the exclusion of remuneration received by a foreign technician for 24 months from their arrival in India, subject to certain conditions. The dispute was over the calculation of the exemption period. The technicians argued for a full two or three months' benefit based on their arrival dates. They cited legal precedents related to other sections for their interpretation. However, the tribunal clarified that the exemption amount was calculated monthly based on the employer's payment structure. The tribunal upheld the ITO's decision to restrict the exemption period for the technicians, as it was deemed appropriate and in line with the statutory provisions.

Conclusion:
The tribunal partially allowed the appeals, upholding the restrictions on standard deductions and exemption periods for the foreign technicians. The judgment provided detailed analysis and interpretation of the relevant sections of the IT Act, emphasizing the importance of adherence to statutory provisions and employer payment calculations in determining tax liabilities for foreign employees in India.