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TMI Blog1988 (7) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the interests of revenue. He was of the view that there had been a violation of the provisions of section 10(6)(vii)(a) and as a consequence the payment of tax on behalf of the assessee by the employer required to be added as a perquisite in the hands of the assessee. 3. In the reassessment proceeding subsequent to the order of the Commissioner of Income-tax under section 263, the first charge of violation which was laid against the assessee was that the remuneration paid to him exceeded the limit approved by the Government. According to the department, a salary of Rs. 8,000 per month with annual increment of Rs. 500 had been approved whereas the assessee had been paid bonus by the company over and above these figures. The second charge was that the contract of service had not been approved in time, viz., prior to 1st day of October of the relevant assessment year. It was on the a fire said two ground that the CIT set aside the assessee meant and it was no similar grounds that the ITO recomputed the assessable income. The ITO brought to tax a further sum of Rs. 2,33,630 being the perquisite on account of the taxes paid by M/s. Lakhanpal. The impugned addition was made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry for availing exemption u/s 10(6)(vii)(a) were fulfilled in the case of the assessee. This decision was arrived at after taking into account the corresponds which took palace between the Indian Company employing the assessee and the Government of India regarding the approval of salary and its extent. 7. As regards assessment year 1980-81, the CIT (A) specifically recorded that all conditions regarding the extent of salary and allowances as laid down by the section stood fulfilled and within the meaning of the section accorded by the Government of India. He, however, found that there was a delay in obtaining the approval but the same condoned following the decision of the Calcutta High Court in the case of CIT v. Birla Bros. (P.) Ltd. [1982] 26 CTR (Cal.) 4. 8. In respect of assessment year 1981-82, the CIT (A) observed as follows : "7. For the assessment year 1981-82, there is no change in the factual position. The salary and allowance paid to the foreign Technical were covered by the letter of approval issued by the Government of Indian and the subsequent attributes obtained from them. As regards the date of approval, there was no delay. The approval was obtained on 4-12-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bonus was specifically prohibited. According to him, the approval accorded by the government mentioned the figures of Rs. 8,000 p.m. and the annual increment of Rs. 500 p.m. but also subsequently clarified that it was not considered necessary to indicate the figures of allowances and perquisites. He invited our attention to page 38 of the paper book which was the copy of the letter dated 4th Sept. 1977 addressed by the Ministry of Industry to the employer. According to him, this letter had been received in response to a clarification sought by the employer vide its letter dated 24th June, 1977. In support of his arguments the learned counsel also refereed to various other letter received from the Government of India and appended to page 27 and 30 of the per book. He also invited our attention to page 33 of the paper books which was the copy of the application made and wherein had been detailed the terms of the service contract between the company and the assessee. It was submitted that column (a) in the said application mentioned the salary of Rs. 8,000 p.m. with the annual increment of Rs. 500 p.m. and column (f) mentioned the payment of "bonus" as applicable to the other offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the employer. As rightly argued by the assessee's counsel. the stress was on the approval of the contract of service rather than the quantum of individual items of payment. The only items which had been specified were the salary per month and the annual increment. We accordingly concur with the CIT (A) and hold that there has been no violation of the provisions of section 10(6)(vii)(a) insofar as they pertain to the quantum of payment made to the assessee in respect of salary and allowances. 14. We are also in agreement with the decision of the first appeal. late authority insofar as it pertains to the date on which the approval was accorded by the Governments. The words mentioned in the section are "1st day of October of the relevant assessment year". The approval was obtained on 4-12-1980 as against the due date of 1-10-1981. The ITO has wrongly adopted the date as 1-10-1980, viz., the 1st day of October of the previous year. 15. Before we part with this appeal we would like to mention that it escaped our comprehension as to how the department came up in appeal for assessment year 1981-82 and not 1980-81 although the factual position obtaining in assessment year 1980-81 was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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