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TMI Blog2011 (9) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 302/- made under the provisions of Sec.40 (1) (iii) of the I.T. Act, 1961, is not justified in the eyes of law? Brief facts, giving rise to this Income Tax Reference as stated in the statement of the case, may be reproduced as follows:- "2. Facts to be stated succintly are that the assessee by status a public limited company, carries business of construction of dams and canals etc. in India and manufacturing and sale of cement in Iraq. 3. For construction of a severage net work and pumping station in Bagdad, employees were sent by the assessee from India in terms of specific agreement. One of these terms was that the salary would be paid in Iraqi Dinars subject to the deduction of income-tax as per existing laws of both the countries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of a communication dated 6th January, 1989 from the EXIM Bank which, interalia, cited that the amounts credited directly by Banks into the NRE accounts of the employees would be deemed to be foreign exchange repatriated into India. In view of the Commissioner (Appeals) this arrangement did not affect the specific provisions of the Income-Tax Act, 1961 and the same was relevant only for the Non-resident Extraordinary Account Rules, 1970 under which if the amounts were not deemed to be foreign exchange, then the credit in the respective NRE accounts was not acceptable...." Shri Shambhu Chopra, learned counsel appearing for the department submits that even if there were any special circumstances, the amount earned by the employees of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he employees chargeable to tax in India. He has relied upon Sections 4, 9 (2) and Section 15 of the Act to support his argument that unless the salaries were earned by the NRI employees of the assessee-company in India, the income from such salary was not taxable and thus the assessee-company was not required to make deductions under Section 192 of the Act. He submits that in the circumstances one of the essential conditions in Section 40 (a) (iii) namely that the income was chargeable to tax in India was not satisfied to deny the deductions. We do not find that the Tribunal committed any error in allowing the appeal of the assessee-company against the order of the CIT (A). The Tribunal in our opinion correctly found, that unless the salar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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