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TMI Blog2008 (2) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... a. 2. in not appreciating the fact that the claimed deduction has been disallowed on the basis of explanation to S.9(1)(ii) substituted w.e.f 1.4.2000, i.e. subsequent to the ITAT, Delhi Bench judgment in the case expatriate employees of M/s Air France dt. 2.8.1999 3. in giving a decision contrary to the Hon'ble Uttaranchal High Court decision in the case of CIT, Dehradun vs SEDCO Forex International Drilling Co. Ltd. Dt. 10.10.2003 wherein the Hon'ble High Court has held that in certain cases even if services are rendered outside India, the income can still accrue or arise in India. 3. The facts and circumstances under which these grounds arise for consideration are as follows. The assessee is a French Citizen. He is employee of Air France posted in India since 8.8.2000 ( Sri Eric Maurou) and since 12.3.97 (Ghorayeb Emile). The status of both the assessees is Resident But Not Ordinary Resident. Mr. Eric Maurou worked as General Cargo Manager, Mr. Ghorayeb Emile worked as Finance and Administration Controller. They filed return of income in respect of salary received in India. As per the terms of employment between the assessee and Air France apart from rendering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of the Special Bench of the ITAT in the case of expatriate employees of Air France viz., J.Calle and Others in ITA 5921 to 5929/Del/86. According to the A.O. this decision of the Special Bench was rendered in respect of the period prior to the insertion of new Explanation and, therefore, could not support the plea of the assessee. In the Special Bench the decision referred to above it has been held on identical facts that salary for services rendered outside India must be excluded in determining the taxable income in India. 6. On appeal by the assessee the CIT(A) deleted the addition made by the AO by following the decision of the ITAT Special Bench referred to above. 7. Before us the ld.D.R. relied on the Order of the AO and submitted that there was no proof of the actual nature of work done by the assessees in France and South Asia and in the circumstances the presumption drawn by the A.O. was justified. In the alternative it was submitted by him that the matter should be remanded to the AO for fresh consideration and the assessee should be directed to let in evidence to prove that the services rendered in France and South Asia had no connection in the princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of the perquisites were furnished by the assessee at the assessment or appellate stage, 10. In the case of Eric Mauro the above grounds are against the additions made by the AO on estimated basis in respect of the contribution to the various social security scheme in France as per terms of the agreements As stated earlier, the assessee is an employee of Air France and as per the term of employment, Air France is mandatorily required to contribute to the various social security scheme like CFE (for health insurance ) MNPAF (National mutual benefit company) CFEC for retirement scheme) UPS - UPC (for supplementary pension scheme, widow hood, long illness etc. These contributions are in the nature of obligation of the French national to affiliate, with security organizations which are quite different from the various schemes prevalent in India which are basically in the nature saving scheme. The AO treated these as perquisites and brought the following amounts to tax. CFE ₹ 83,375/- MNPAF ₹ 83,375/- CFE ₹ 83,375/- UPS-UPC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided is whether the aforesaid allowances by way of contributions to the Social Security Schemes are at all taxable. The most important aspect ignored by the A.O. is that these payments are not in the discretion of the assessee but are mandatorily required to be made and the assessee has no control over these payments. The issue regarding contributions to various social security schemes has been examined in detail by the Hon'ble ITAT Bench of Mumbai in Gallotti Raoul vs ACIT (1997) 61 ITD 453 92 Taxman 246 (Mum) (Mag.) facts of which are identical those of the assessee. It was held that these contributions are not the perks but diversion of income by overriding title and cannot continue income in the hands of the assessee. It would be in the fitness of things to reproduce below the operative part of the decision. The assessee were French nationals and employees of a French company, who had taken contract of construction work at Bombay. In terms of French Legislation every individual is to contribute social security charges. Social security charges have to be contributed to a social security organisation which guarantees the workers and their families against all types of ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nos. 4 and 5. 14. Ground no. 6 in ITA 1174/Del/05 reads as follows. 6. That on the facts and circumstances of the case, the ld CIT(A) has erred in law and on facts by deleting the addition of ₹ 1,01,000/- (grossed upto ₹ 1,69,492/-) on account of unexplained cash credits u/s 68 of the I.T.act holding that proof regarding the availability of the cash balance was provided to the AO as also that the assessee was highly paid employee having salary income of ₹ 12 lakhs p.m. whereas the assessee's monthly income was not ₹ 12 lakhs apx. ₹ 1 lakh per month and Satisfactory evidences regarding cash credits were not provided to AO . 15. In this ground the assessee has challenged the addition of ₹ 1,01,000/- made by the AO by treating the cash deposited in assessee's bank a/c in India as unexplained cash credit. The AO found certain cash deposits in the bank account of the assessee and called upon the assessee to explain the source of cash deposit. The assessee explained that these cash deposits were made out of cash withdrawals made by the assessee from the bank accounts over a period of two years when he was in India. The AO made the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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