ALESSANDRO CONSTANTINI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO separate statements of cases have been submitted and the questions of law referred to this Court for decision by the Tribunal being from the very same order passed in Appeal No. 834/Ahd/80 for the asst. yr. 1976 -77, we propose to decide these reference applications together by this common order.

(2.) THE facts as found by the Tribunal are that Mr. Alessandro Constantini, the assessee, is a non -resident assessee. M/s Air Control and Chemical Engineering Company (hereinafter referred to as the Indian company) was assessed as employer of the assessee on the strength of a general power of attorney held by it. The assessee was working with Air Control and Chemical Engineering Company between 27th Nov., 1975 and 16th June, 1976. The Air Control and Chemical Engineering Company had a collaboration agreement with M/s Italviscosa Eastern Trading of Milan. (hereinafter called as the collaborator company) The assessee was an employee of the collaborator company and was sent to India at the instance of his employer in Italy to work as Chief Design Engineer at Indian company. According to the letter containing the terms of employment of the assessee he was appointed by the Technical Collaborator as Chief Design Engineer to work with the Indian company for a period of approximately 3 years (1095 days). Salary at the rate of 75 dollars per day was to be remitted to collaborator company by the Indian company. He was entitled to pocket allowance at the rate of Rs. 110 per day free of taxes payable in India. Ap] from the aforesaid two sums he was also entitled to free -furnished flat and transport to and from the works.

(3.) REGARDING the pocket allowance which was undoubtedly received by the assessee in India, the Tribunal arrived at a finding that the assessee has not been able to substantiate the claim that this amount was paid in order to meet with the increased cost of living in India and on this count distinguished the case relied upon by the assessee referred to above. While holding that the pocket allowance was taxable in the hands of the assessee, it further held that as the said allowance was not paid to the assessee in his capacity as employee of the Indian company the receipt cannot be regarded as taxable under the head of salary and, therefore, standard deduction from that income, is not permissible.