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TMI Blog1991 (8) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,257 (b) Pocket Money 48,860 (c) Free conveyance 1,200 (2) The learned CIT(A) has also erred in confirming the action of the ITO relating to the addition by way of grossing up of tax perquisite of Rs. 9,02,946. (3) The CIT(A) has erred in not deleting the interest charged by ITO under s. 217. 3. The learned counsel for the assessee did not press the ground relating to inclusion of Rs. 7,257 being value of rent-free accommodation and Rs. 1,200 on account of free conveyance. The ground relating to these two items is, therefore, rejected, as not pressed. 4. The next addition relates to an addition of Rs. 48,860 being pocket money paid to the assessee by the Indian Company as pocket money at the rate of Rs. 140 per day. The ITO observed that such allowance given by the Indian Company to the appellant for meeting his living expenses/personal expenses clearly amount to perquisite which is liable to tax. 5. The CIT(A) has discussed this point in para 6 and 6.1 of his order. It was observed that the appellant was paid pocket money of Rs. 46,860 at the rate of Rs. 140 per day in addition to food expenses paid to him separately at the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(24)(iiia) and (iiib) inserted by the Direct Tax Laws (Amendment) Act, 1989 with retrospective effect from the year 1962. This is clearly mentioned in the Commentary by Palkhivala at the same page 416 where the learned authors have clearly commented that such allowances which have been held to be not liable to tax by the Hon'ble Gujarat and Madhya Pradesh High Court is now deemed to be income by s. 2(24)(iiia) and (iiib). These newly inserted provisions with retrospective effect create additional categories of income liable to tax by virtue of the expanded definition of income contained in these new provisions. The allowances or any other benefit granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an employment or profit as well as the allowances granted to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place he ordinarily resides or to compensate him for the increased cost of living have been included in definition of income liable to tax under the provisions of IT Act except to the extent and subject to the conditions provided in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) (viia) has been admitted by the ITO himself and he has allowed deduction under that section calculated at the rate of Rs. 4,000 per month (30 days) for 349 days. It is thus an admitted fact that the assessee is entitled to grant of exemption under s. 10(6)(viia). The said provision apart from providing for grant of exemption at the rate of Rs. 4,000 per month further provides that where the tax on the remuneration on the excess amount paid beyond by the rate of Rs. 4,000 per month is paid by the employer, the tax so paid by the employer on behalf of the said employee will also be exempt under s. 10(6)(viia)(1)(A). He also invited our attention towards cl. J of agreement dt. 5th Feb., 1979 executed between BHEL and the foreign company to show that taxes in respect of income of foreign technician were to be paid and borne by the employers. In view of this it was contended that the said addition confirmed by the CIT(A) should be cancelled. He also relied upon the decision of Tribunal, Delhi in the case of ONGC vs. CIT (1989) 31 ITD 329 (Del) to support this contention. 10. The ld. Sr. Deptl. Representative contended that such contention has not been considered by the CIT(A). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of sub-clause by the prescribed authority or in any business carried on in India subject to the fulfilment of conditions prescribed in the said provision. In relation to services commencing after 31st day of March, 1971 but before 1st day of April, 1988, which is applicable in present case such remuneration due to or received by the foreign technician during the period of 24 months commencing from the date of his arrival in India, in so far as such remuneration does not exceed an amount calculated at the rate of Rs. 4,000 per month will be exempt. This exemption at the rate of Rs. 4,000 per month has been granted to the appellant by the ITO. The said provision further provides that the tax on the excess remuneration beyond at the rate of Rs. 4,000 per month is paid to the Central Government by the employer, the tax so paid by the employer shall also be exempt under the said provision. The applicability of s. 10(6)(viia) has been accepted by the ITO himself in the present case. The contract for employment of the appellant as a foreign technician has also been approved by the Ministry of Industry vide letter dt. 11th Oct., 1983. This approval was accorded pursuant to an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered necessary by him, the relevant application and other documents submitted for grant of approval by the Ministry of Industry in respect of contract service of the appellant as a foreign technician under s. 10(6)(viia) with a view to find out whether (sic the entire period of the service rendered by him in India. The CIT(A) may also ascertain the factual position as to from whom the assessee had received the salary and as to whether the tax was paid and borne in fact by the employer company so as to grant the desired exemption under s. 10(6)(viia). The CIT(A) may also consider Circular No. 56, dt. 19th March, 1971 containing explanatory notes explaining the various amendments made by the Taxation Laws (Amendment) Act, 1970 published in Taxman's Direct Taxes Circular, 1988 Edition, Vol III at Page 353. At page 376. The provisions of s. 10(6) (viia) have been explained in the said circular, inter alia, saying that if the employer pays tax on such excess remuneration (beyond Rs. 4,000 per month) to the Central Govt. the perquisite represented by the tax so paid by the employer will also be exempt from further taxation in the hands of the foreign technician. With this observation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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