COMMISSIONER OF INCOME TAX Vs. DE MARCHE ENRICO

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following question of law under Section 256(1) of IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court: "Whether the Tribunal was correct in law in holding that the assessee is entitled to the benefit claimed by him under Section 10(6)(viia) of the IT Act, 1961, in respect of the salary, including perquisites received by him ?" The present reference relates to the asst. yr. 1979-80.

(2.) Briefly stated the facts giving rise to the present reference are as follows : The respondent-assessee is a foreign national and an employee of M/s Technimont of Italy. M/s J.K. Synthetics Ltd. had entered into an agreement for some technical collaboration with the Italian firm in pursuance of which the said firm had deputed the respondent-assessee for doing some technical work in India with M/s J.K. Synthetics Ltd. The assessment was completed under Section 143(3) of the Act on 25th March, 1985 on a total income of Rs. 1,35,440. The respondent-assessee had claimed that he is not liable to tax as the amount is exempt under Section 10(6)(viia) of the Act. The plea was negatived by the assessing authority. Feeling aggrieved, the respondent-assessee preferred an appeal before the CIT(A), who had upheld the decision of the assessing authority on the following grounds : "Since the appellant cannot be said to be in the employment of either Government or the local authority or any corporation set up under special law or any institution established for carrying on scientific research, this benefit cannot be given to the appellant. The appellant might claim benefit by writing the words 'in any business carried on in India.' In my opinion the appellant would not be entitled to it for two reasons. In the first instance the word 'of' has been used for the employment of the technicians by the concerned employer, i.e., of the Government or a local authority or any corporation or any such institution and hence the words in any business would not be in conformity with the reading of the section. Secondly, as per appellant's own claim while dealing with the first objection where the entire income was claimed to be exempt, it has been claimed on behalf of the appellant, that the appellant was not an employee of M/s J.K. Synthetics; it was claimed that the appellant was an employee of M/s Technimont of Italy and he was rendering services in India on account of agreement of M/s J.K. Synthetics with M/s Technimont and hence he was in employment of Italian concern and instead of him any other person could have been sent by M/s Technimont to do the job for M/s J.K. Synthetics Ltd. This would mean that the appellant was not a technician who was in the employment of M/s J.K. Synthetics Ltd. which is carrying on business in India. In these circumstances, I am of the opinion that the appellant is not entitled to the benefit claimed by it at the rate of Rs. 4,000 per month under Section 10(6)(viia). Hence this objection is also dismissed."

(3.) Still feeling aggrieved the respondent-assessee filed second appeal before the Tribunal. The Tribunal has accepted the claim put forward by the respondent-assessee and had held that the respondent-assessee is entitled to exemption under Section 10(6)(viia) of the Act. While holding so the Tribunal has followed its decision of Ahmedabad Bench in the case of E. Battelli v. ITO (1986) 26 TTJ (Ahd) 96 : (1986) 16 ITD 652 (Ahd). We find that the Tribunal has held that it is not necessary that the foreign firm should carry on any business in India or the assessee was not an employee of the Indian firm. On undisputed fact the assessee having specialised knowledge and experience had actually used the same in constructional or manufacturing operation of the Indian firm which carries on business in India.