COMMISSIONER OF INCOME TAX Vs. HANS BEER

JUDGEMENT

(1.) In this reference under Section 256(1) of the Income Tax Act, 1961, the following question of law has been referred for our opinion:-

(2.) In Commissioner of Income Tax v. Goslino Mario And Others, [2000] 241 ITR 312, one of the questions considered by the Supreme Court was whether the Tribunal was right in law in holding that the payment taken in India in the shape of daily allowance was not exempt from tax under Section 10(14) of the Income Tax Act, 1961.

(3.) The Supreme Court approved the view taken by the Gauhati High Court in Commissioner of Income Tax v. Goslino Mario, [2000] ITR 314, to the effect that under Section 10(14) of the Act any special allowance specifically granted to meet expenses wholly, necessarily and exclusively incurred for the purpose of the duties of office or employment is exempt from tax to the extent such expenses are actually incurred for that purpose. The Gauhati High Court had referred to several decisions and concluded, affirming the view taken in Commissioner of Income Tax, Gujarat v. S.G. Pgnatale, [1980] 124 ITR 391 and Commissioner of Income Tax v. J. Jenkin Thomas And Others, [1975] 101 ITR 511, that if the amount paid be a kind of reimbursement for an expenditure incurred for the performance of the duties of the assessee, the same would not be liable to be taxed as salary. In those cases, as well as in the present case, the Assessee were foreign technicians and were required to stay away from their homes and consequently the daily allowance given to them was related to the extra expenditure that they were required to undertake on food etc. which was wholly, necessarily and exclusively for the purpose of the duties, and as such it was in the nature of reimbursement which would be excluded from the net cast by the Act.