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TMI Blog1997 (1) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... ary without adjustment of the social charges. For the assessee, Senior Advocate, Mr. Dinesh Vyas argued and Mr. Arvind Modi, the learned Sr. Departmental Representative, represented the department s point of view. For the commonality of the issues involved, these appeals were grouped together and are being disposed of by this common order. 2. It is not disputed between the parties that insofar as the period for which the French nationals were not in India, the Tribunal in identical cases, had taken the view that the salary that is to be brought to tax in India is and should be limited to the period for which they worked in India. Mr. Modi, however, brought to our attention the order of the Tribunal, Mumbai Bench B in the case of Warner Dahl [IT Appeal Nos. 2707 and 2708 (Bom.) of 1990 and few other dated 24-7-1995], who were from West Germany and were in connection with Maharashtra State Electricity Board in which the decision of the Tribunal was that for the period they were not working and were in Germany the salary paid for those holidays or working days, but connected to the work in India, should be brought to tax in India. 3. On this issue after considering the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that visits to France and/or other countries were related to work for India. Therefore, we hold that the salaries of the assessees should be taxed in India only to the extent of the period of stay in India. We direct accordingly. 4. The other common issue is the social charges which the foreign nationals are stated to be under compulsion to contribute from out of their income in France. The facts are that this social security charges had to be contributed to a social security organisation which guarantees the workers and their families against all types of risk susceptible to reduce or curtail their earning power/capacity including maternity and family costs. It also covers all French nationals and their families including medical cost, family cost, etc., and assures the benefit of social insurance, work accidents, professional sickness, old age allowance, family allowance, etc. Mr. Vyas, the learned Sr. Advodate, referring to pages 6 and 7 of the paperbook, which is the extract of the requirement of social securities, submitted that all French nationals have to compulsorily contribute to the social security organisation failing which they are punishable by fine and it also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pompei Tile Works (1989) 175 ITR 1/(1988) 41 Taxman 181had an occasion to consider the overriding title concept and had observed that it is something that is diverted at the stage of earning itself. He submitted that the Bombay High Court in CIT v. Bombay State Road Transport Corpn. (1977) 106 ITR 303was considering the contributions that were made under the statutory provisions whether the same was deductible in computing the income and the Court ruled that the contributions are made under a statutory rule and hence are deductible from the revenue income. The Karnataka High Court in CIT v. Pandavapura Sahakara Sakkare Karkhane Ltd. (1988) 174 ITR 475considered the contributions made by a co-operative society to an education fund under the provisions of Karnataka Co-operative Societies Act and had concluded that such contribution was diversion by overriding title. A similar view was taken by the Madhya Pradesh High Court in Keshkal Co-operative Marketing Society Ltd. v. CIT (1987) 165 ITR 437/ 30 Taxman 437. The Karnataka High Court followed its earlier decision in identical case in Pandavapura Sahakara Sakkare Karkhane Ltd. (supra). The Bombay High Court in Somaiya Orgeno-Chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees, or working in any cadre, or place, for one or more employers, for whatsoever sum, or whatever type of remuneration, form, nature or validity of their contracts. This aspect has an important bearing especially in the instant cases because all the appellants are French nationals. According to the above requirement of the social insurance, the French nationals have to be affiliated to the social insurance regardless of the fact whether they are working in France or in any other place. It is an undisputed fact that the French Tax Act allows full deduction of the social security contributions from the income and it is only on the net income that tax is levied. As has been stated by the assessees and not disputed by the department, the social security is to cover various aspects, costs, etc., including medical, old age, professional sickness and the like. The compulsory nature of the affiliation was insisted by the learned Sr. Advocate as the social security organisation having a prior charge in the income of any person, who is a French national. In so far as the concept of such compulsory contribution to social security is concerned, it is not prevalent in India. The various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one s own income, which has been received and is since applied. The Supreme Court in Vibhuti Glass Works case (supra) was considering a situation where the company which was suffering losses, the financial institutions came forward to grant a loan and the State Government took over the responsibility of running the glass factory with the condition that as and when the company starts deriving profits beyond a particular limit, half share of the profits would go to the Government. It was because of this contractual arrangement that the Supreme Court came to the conclusion that there was no diversion by overriding title but a mere sharing of the profits if and when it is so earned and that too beyond a particular limit. Therefore, this particular case has no relevance to the present issue that is before us. Likewise the case of Bombay High Court in Life Insurance Corpn. of India s case (supra) has no application to the facts of the case before us because in that case too it was appropriation of the profits that was involved. The M ..... 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