1981 (12) TMI 88 - AT - Income Tax

Summary

Issues:
- Assessment of foreign salary income and tax deductions
- Deduction of contributions towards Health Success Scheme
- Standard deduction under section 16(1)
- Assessment of rent-free accommodation value

Assessment of Foreign Salary Income and Tax Deductions:
The appeals involved the assessment of foreign salary income and tax deductions for the assessment years 1976-77 and 1977-78. The Commissioner, Jodhpur, found that the orders of the ITO allowing tax deductions were erroneous and prejudicial to the interest of the revenue. The Commissioner contended that the tax deducted at source by the Government of Iran from the salary paid to the assessee was erroneously allowed in full, contrary to the provisions of section 91 of the Income-tax Act. Additionally, the Commissioner argued that the deduction claimed against foreign salary income under section 80 RRA was excessive. However, the ITAT Jaipur, in line with a previous order, held that there was no error in the ITO's orders regarding these deductions. The ITAT concluded that the orders were not prejudicial to the revenue's interest in this regard.

Deduction of Contributions towards Health Success Scheme:
The Commissioner also raised concerns about the deduction claimed by the assessee for contributions towards the Health Success Scheme in Iran. The Commissioner deemed these contributions as perquisites chargeable to income tax under section 17(2)(iv) of the Income-tax Act. However, the ITAT disagreed with this assessment. The ITAT examined a certificate provided by the authorities in Iran, which indicated that the deductions were made for compulsory health schemes, not as perquisites. The ITAT held that these deductions were not chargeable as perquisites under the Income-tax Act, thus rejecting the Commissioner's contention.

Assessment of Rent-Free Accommodation Value:
Another issue raised by the Commissioner was the assessment of the value of rent-free accommodation provided to the assessee in Iran. The Commissioner argued that the ITO had not included the value of this concession in the assessee's income, leading to an erroneous assessment. However, the ITAT analyzed the provisions of section 5(1)(c) of the Income-tax Act and determined that the value of the rent-free accommodation was deemed income accruing outside India and, therefore, not includible in the assessee's total income. Relying on the provisions of the Act and a decision of the Calcutta High Court, the ITAT concluded that the orders of the ITO were not erroneous in this regard.

In conclusion, the ITAT Jaipur allowed both appeals, disagreeing with the Commissioner's findings and canceling the orders that deemed the ITO's decisions as prejudicial to the revenue's interest.