MORGENSTERN WERNER Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner is a technician and was working with Kraft Work Union (Siemens), Germany, and drawing his salary of DM 3,882 per month in Germany. THE said salary was received by him in Germany from his employer. Bharat Heavy Electricals Limited (BHEL) sought the services of a technical liasion officer to provide technical guidance for 4/500 M. W. nuclear turbines and for the manufacture of turbines of higher rating in India from Siemens, Germany. For getting the services of foreign technicians, a reference was made by BHEL to the Government of India, Ministry of Industries, vide letter dated May 25, 1,989. THE Ministry of Industries, Government of India, informed the Bharat Heavy Electricals Limited about the approval of the Government for engaging the services of the petitioner, an employee of the aforesaid Siemens Company at Germany, for a period of 1.5 years in India on terms of payment of daily allowance of Rs. 500 per day in India. On the basis of the said approval, the petitioner came to India for rendering services to BIIEL on deputation. THE petitioner during the assessment years 1990-91 and 1991-92, received a sum of Rs. 1,11,264 only as daily allowances and did not receive any other sum. However, under mistaken advice, the petitioner filed a return showing the income from salary received by the petitioner at Germany from Siemens. In the said return, the petitioner claimed exemption of daily allowance to the extent of Rs. 1,11,264 and deposited a sum of Rs. 2,51,240 on account of income-tax under Section 10(14)(i) of the Income-tax Act, 1961 (hereinafter referred to as "the Act").

(2.) THE Assistant Commissioner of Income-tax also wrongly assessed the income of the petitioner as shown in the return and adjusted the amount of income-tax paid by BHEL to the extent of Rs. 2,51,240. After the assessment was completed and the mistake was realised, the petitioner filed a revision application before the Commissioner of Income-tax under Section 264 of the Act. Before the Commissioner it was contended that the salary was not received in India but had been received from Siemens in Germany and, inasmuch as, the petitioner was an employee of Siemens, Germany, he was not liable to pay any tax in India. It was contended that no income towards salary was received by the petitioner from BHEL in India but only an amount of Rs. 1,11,264 was received as daily allowance, which was not taxable under Section 10(14)(i) of the Act. It was contended that the amount of tax paid by BHEL was also not liable to be paid inasmuch as, there was no relation of employer and employee between BHEL and the petitioner. As such, BHEL could not have paid Rs. 2,51,240 towards tax on behalf of the petitioner. THE petitioner prayed that the assessment orders passed on November 27, 1992, for the assessment years 1990-91 and 1991-92 and the order passed by the Commissioner of Income-tax on February 18, 1994, for the said assessment years be set aside and cancelled. It has further been prayed that the amount of tax deposited for the assessment years 1990-91 and 1991-92 be refunded.

(3.) MR. Rajesh Kumar, arguing on behalf of the petitioner, submitted that though the petitioner was a resident in India for the purposes of Section 6(1) of the Act, inasmuch as, he had stayed in India for more than 182 days, he was not "ordinarily resident" in India in the previous year in view of Section 6(6) of the Act. According to him, the proviso to Section 5(l)(c) makes it abundantly clear that if a person is "not ordinarily resident" in India and his income arises outside India, such an income cannot-be included for the purposes of making assessment in India. To appreciate the arguments of MR. Agarwal, I set out the relevant provisions which read as follows :