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TMI Blog1989 (10) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ted either temporarily or permanently abroad or whether it covers also the cases of employees who merely go on foreign tour in connection with the work of the employer?" 2. The assessee is a company. The assessment year is 1979-80 and the relevant previous year ended on 30-11-1978. 3. During the relevant previous year, the assessee had sent two of its employees viz., S/Shri R.N. Langrana and A.E. Sequira on a foreign tour for few days. In its return of income, the assessee had worked out disallowance of Rs. 1,05,585 under sec.40A(5)/40(c) of the Act. In the draft assessment framed u/s.143(3)/144B of the Act, the I.T.O. had worked out such disallowance at Rs. 1,48,250. 4. One of the objections raised by the assessee, against the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered as employment outside India. The section does not apply only to cases where employees may be wholly stationed abroad. In this view of the matter I uphold the appellant's contention and accordingly direct the Income-tax Officer to exclude salary relating to the period during which the employees were outside India." 7. Being aggrieved by the action of the CIT(A), the Revenue came up in appeal before the Tribunal. The Revenue, relying on the order of the Tribunal in the assessee's own case for the assessment year 1978-79 (ITA Nos. 1017 and 1689/ Bom/1982, dated 15-7-1983), contended that the order of the CIT(A) on this point should be reversed. The assessee, on the other hand, relying on the order of the Tribunal in the case of Gar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. He also referred to the meaning of the word " employment" contained in Law Lexicon by Venkatramaiya as well as dictionary meaning of the word "salary" considered/noticed by the Hon'ble Supreme Court in the case of Gestetner Duplicators (P.) Ltd. v. CIT [1979] 117 ITR 1. He, therefore, urged that the CIT(A) was not justified in deviating from the earlier order of the Tribunal in the assessee's own case for the assessment year 1978-79. He also pointed out that the permission of the Reserve Bank of India is required in the case of a foreign trip/tour undertaken by an employee employed in India, to meet the foreign tour expenses. However, such is not a case where the employment abroad is involved. In other words, he wanted to emphasise that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hipping company. Further, he submitted that the view taken by the Tribunal in this case is a better view than the one taken by it in the assessee's own case as well as in the case of Hoechst Dyes & Chemicals Ltd. He, therefore, urged that the view taken in the Garware Shipping Corpn. Ltd.'s case should be adopted by us. 10. We have carefully considered the rival submissions of the parties as well as perused the aforesaid orders of the Tribunal and we find considerable force in the submissions made on behalf of the revenue. In order to appreciate the rival contentions of the parties, it would be necessary to reproduce below the relevant portion of sec. 40A(5) of the Act. "40A, Expenses or payments not deductible in certain circumstances. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing an individual who ceases or ceased to be the employee of the assessee during the previous year or any earlier previous year, sixty thousand rupees:" 11. Clause (a) of Sec. 40A(5) requires to consider any salary/perquisite paid to an employee subject to the provisions of clause (b) of the said section. Under sub-clause (i) of clause (b) salary/perquisite paid to an employee in respect of any period of his employment outside India has to be ignored. Clause (c) stipulates the limit in excess of which salary/perquisite paid to an employee is to be disallowed. Now, the crucial words which we are required to interpret in this case are "any period of employment outside India". As noted above, according to the revenue, clause (b) would be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees employed outside India. In other words, according to us, the provisions of sec.40A(5) are made applicable in respect of salary/perquisite paid to an employee who is in employment within India. In this view of the matter, we do not agree with the submissions made on behalf of the assessee that the foreign trip undertaken by its employees, even though stationed in India, should be treated as "period of employment outside India'. We have carefully gone through the order of the Tribunal in the case of Garware Shipping Corpn. Ltd. to which one of us was a party and are of the view that the decision of the Tribunal has turned on the peculiar facts obtaining in that case. it is no doubt true that certain observations made by the Tribunal appar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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