COMMISSIONER OF INCOME TAX Vs. AIR FRANCE

JUDGEMENT

(1.) BY this application under S. 256(2) of the IT Act, 1961, the Revenue seeks a direction to the Tribunal to draw up a statement of the case and refer the following questions, stated to be one of law, in respect of asst. yr. 1983-84, for the opinion of this Court :

(2.) THE assessee is a foreign company with its head office in France. It paid salaries to some of its foreign employees posted in India, which included the amounts payable in France as "part francaise". However, the assessee did not deduct or deposit income-tax on the said amount under s. 192 of the Act. This fact came to the notice of the Revenue during search operations conducted at the premises of the assessee. The ITO levied penal interest under S. 201(1A) of the Act for non- deduction of tax by the assessee on the afore-noted amount. Assessee's appeal to the CIT(A) failed but in further appeal to the Tribunal, the interest so levied was deleted. While doing so the Tribunal came to the conclusion that the assessee was under a bona fide belief that part of the salary paid outside India as 'part francaise' was not chargeable to tax. It was observed that prior to the amendment of S. 9(1)(ii) of the Act in 1983, the decision of the Gujarat High Court in the case of CIT vs. S. G. Pgnatale (1980) 16 CTR (Guj) 337 : (1980) 124 ITR 391 (Guj) : TC 39R.1267 held the field and as per the said decision no tax was chargeable on the French portion of the salary. From a bare reading of the order of the Tribunal it is evident that question No. 1 does not arise out of the said order. The Tribunal has nowhere expressed its view on the question whether the amendment of S. 9(1)(ii) of the Act is prospective or retrospective. It has merely observed that prior to the said amendment the assessee was under the bona fide belief that no tax was chargeable on the afore-noted portion of the salary paid to its employees outside India. We find that the finding recorded by the Tribunal to the effect that the assessee was under a bona fide belief that it was not liable to deduct tax has not been challenged by the Revenue in the proposed question No. 1. In this view of the matter proposed question No. 2 is rendered academic.

(3.) THE petition fails and is accordingly dismissed.