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TMI Blog1990 (2) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... the sea by using the ship or vessel as the platform/standing base. A sum of US $ 19,61,837 was paid to the employees which included US $ 17,18,038 debited under the head " Labour -- Own employees " and US $ 2,43,799 debited under the head " Marine Equipment ". Applying the provisions of section 40(a)(iii), the entire expenditure on salary was disallowed by the assessing officer as the said payment was made without deduction of tax at source. The assessee claimed before the assessing officer that no tax was payable on the payment of the aforesaid amount as the same was exempt under section 10(6)(viii) and, therefore, the provisions of section 40(a)(iii) are not applicable. This contention was rejected by the assessing officer by observing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. It cannot be covered by the term ' regular employees doing performance of their jobs on the ships '. As regards crew members of the ship you may verify the same and allow, if eligible." The ITO verified the details of the salaries paid by the assessee but reiterating his earlier view, the disallowance proposed in the draft assessment was maintained. 5. The claim of the assessee was also not accepted by the CIT(A). He observed that the exemption under sec. 10(6)(viii) was meant to cover the cases of the crew members of a foreign ships which might be touching the Indian coast for a short duration in a year. In the present case, he observed, the persons to whom the salary was paid by the assessee were essentially employed for laying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of tax thereon or deduction of tax therefrom would not arise. By virtue of section 10(6)(viii), the assessee claimed that the payment was not includible in the total income of the recipient and it was, therefore, not chargeable to tax under the head salaries. 7. Section 10(6)(viii) reads as under : " 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included--- (6) in the case of an individual who is not citizen of India. (viii) any income chargeable under the head ' Salaries ' received by or due to any such individual being a non-resident as remuneration for services rendered in connection with his employment on a foreign ship where his total s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission in pursuance of the agreement. The contention of the assessee, on the other hand, is that everybody who was working on the ship, in whatever capacity, would be entitled to exemption. In any case, it was submitted that in the peculiar nature of the job done which was laying sub-marine pipelines 4 metre under the sea bed, it was absolutely necessary that the same was done from the special type of ships manufactured and fitted with special equipment for this purpose. The crews working operate from the ship and almost all the work is performed only from the ship and, therefore, it was further submitted that the departmental authorities have erroneously rejected the claim of the assessee. The words used in section 10(6)(viii) are " in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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