Where the contracts of service of foreign technicians are approved by the Government of India (in the administrative Ministries concerned), it is open to the I.T.O. to go into certain questions. - Income Tax - 515/CBDT

INSTRUCTION NO. 515/CBDT Dated : Feburary 26, 1973 Section(s) Referred: 10(6)(vii) ,10(6)(viia) Statute: Income - Tax Act, 1961 In the Board's Circular No.14-D of 1956, it was stated that the approval given by the Ministry of Commerce Industry should be accepted by the I.T.O. so far as the terms of service of the technician are concerned and that it was open to the I.T.O. to consider at the time of assessment whether the assessee was a technician in the sense in which the word was used in the Act. This matter was later reviewed and instructions were issued in Board's Circular letter No.42A(29)IT/57 dated the 9th October, 1957 that where the approval is given by the Ministry of Commerce and Industry, it may be assumed by the I.T.O that the person concerned is a technician. 2. A doubt has now been raised whether in cases where the contracts of service of foreign technicians are approved by the Government of India (in the administrative Ministries concerned), it is open to the I.T.O. to go into the question whether- (i) the person concerned has specialised knowledge and experience in constructional or manufacturing operations, etc; and (ii) he is employed in India in a capacity in which such specialised knowledge and experience are actually utilized. 3. The definition of the term "technician" has two limbs. The first limb requires that he should be a person having specialised knowledge and experience in constructional or manufacturing operations or in mining, etc. (hereinafter referred to as the 'requisite knowledge and experience'). The second limb of the definition requires that the person concerned should be employed in India in a capacity in which such specialised knowledge and experience are actually utilised (hereinafter referred to as a 'qualifying capacity'). 4. The decisions of the administrative Ministry on the questions whether the person concerned has the requisite knowledge and experience and whether the capacity in which he is employed can be regarded as a qualifying capacity should be accepted by the Income-tax Officers, unless there is definite information in any particular case to show- (i) that the facts mentioned in the application on the basis of which the administrative Ministry came to decision on these two points are not correct; and/or (ii) that the person concerned has been actually employed from the very beginning in a capacity other than that mentioned in the application for the approval of the service of contract or having been initially employed in a qualifying capacity is subsequently employed in a non-qualifying capacity for any length of time during the period for which the benefit of exemption under section 10(6)(vii)/(viia) is claimed. If the Income-tax Officer has any such definite information in his possession, he should refer the matter to the Board who will decide it in consultation with the administrative Ministry concerned. 5. The above instructions may be brought to the notice of all the officers concerned in your charge.