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TMI Blog1983 (10) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... the said provision. 6. The two employees, referred to in this ground, are Capt. M. R. Dandekar and Capt. P. R. Sawant. They were captains of the ships owned by the assessee and their duty was on board the ships which sailed for abroad. The salary payable to these two employees came to Rs. 66,104 and Rs. 77,877, respectively. The ITO allowed salary to the extent of 60 per cent to each of the employees and disallowed the balance, which came to Rs. 23,981. 7. The contention of the assessee was that salaries paid to these two employees were in respect of the period they were outside India. Clause (b)(i) of section 40A(5) expressly lays down that nothing in clause (a) applies to any expenditure or allowance in relation to any employee in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicates 'outside the territorial boundaries of India'. The word 'employment' connotes 'working as an employee'. Consequently, if the concerned employee, in the course of his employment with the assessee, worked as employee outside the territorial limits of India for any period, then the expenditure on salary and allowances in respect of the said period would be covered by clause (b)(i) of section 40A(5). This appears obvious from the plain reading of the said provisions. 11. The Commissioner (Appeals) has referred to the expression used in section 80RRA of the Act, namely, 'services rendered outside India' and has observed that the said, expression refers to 'physical rendering of services outside India', while the expression 'employment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable for the period which was spent by these two employees in India, although that period was spent on leave. However, as far as that part of the salary is concerned, which pertains to period of employment outside India, there can be no doubt that salary payable in respect of the said period would not be considered for disallowance under section 40A(5)(a). The salary of each of these two employees for the period spent by them in India is below Rs. 60,000. Consequently, even if it is held that the salary payable in respect of the period spent by these employees in India would be subject to disallowance under section 40A(5)(a), no disallowance under that provision can be made in view of the fact that such salary does not exceed the prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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