HORACE DANSEREAU Vs. ASST COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Common questions arise in all these appeals filed by foreign nationals, represented by the Kerala State Electricity Board (KSEB), who acts as their agent. The KSEB entered into a contract of consultancy with SNC - Shawinigan Inc. Canada (for brevity 'the Consultant') for carrying out a project in the site of KSEB, as per the terms of an agreement, entered into between the KSEB and the Consultant. The liability to pay the salary, of the employees deputed by the Consultant to the project site, is of the Consultant itself. However, the income tax component had to be satisfied by the KSEB.

(2.) The petitioners, who were employees deputed by the Consultant, returned their income received in India and showed the tax component paid by the KSEB as "income from other sources". The Assessing Officer added on the tax paid by KSEB, returned as "income from other sources", to the salary paid and computed the total salary paid as provided in Section 195A of the Income Tax Act, 1961 ('Act' for short). Tax was determined for the said component of salary and deductions were made with respect to the tax paid by the KSEB. The balance was demanded from the assesses, the foreign nationals, who were in India by virtue of the contract.

(3.) The assesses filed appeals before the first Appellate Authority, who, based on Emil Webber v. Commissioner of Income Tax - 200 ITR 483, reversed the order of the Assessing Authority and directed the tax paid by the KSEB, returned as other income, to be taxed as "income from other sources". An appeal was taken by the Department to the Tribunal and cross objections were filed by the assesses. The cross objections were later withdrawn. The Tribunal allowed the appeal of the Department upholding the order of the Assessing Authority.