COMMISSIONER OF INCOME TAX Vs. RADOMIR DZELATOVIC

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961, the Tribunal has referred the following question of law to this Court at the instance of the Revenue:

(2.) THE controversy in this case is in a narrow compass. The assessee is a foreign technician. He came to India in February, 1972, to work with Ivan Milutinovic PIM (hereinafter referred to as "the company"). The said company carried on the business of construction of ports and harbours, dredging and reclamation and marine construction. The head office of the said company was situated in Yugoslavia with a branch in India. The assessee is an experienced technician with practical knowledge of electrical installation. The probable duration of his employment was three years. His place of duty was at Naval Dockyard Expansion Project. On 11th March, 1972, the employer of the assessee wrote to the Director General of the Naval Dockyard Expansion Scheme requesting them to forward an application for exemption from payment of income tax for the employee under S. 10(6)(viia)(I)(B) of the Act to the Central Government. The approval was granted by the Central Government by its letter dt. 26th May, 1972, for a period of two years. On 25th March, 1974, the employer of the assessee applied for extension of the exemption. There was some delay on the part of the Central Government in communicating the approval to the employer of the assessee. The approval was granted on 4th Oct., 1975. There is no dispute about the eligibility of the assessee to get the exemption from income nor is there any dispute that the assessee was entitled to the benefit if the approval had been accorded by the Central Government on or before 1st Oct., 1975. The dispute has arisen on account of approval being accorded on 4th Oct., 1975, i.e., beyond 1st Oct., 1975. The sole controversy is whether the three days' delay on the part of the Central Government in according approval on the application of the employer which had been made well within time can be fatal to the right of the assessee to get the benefit of exemption which he is entitled to under S. 10(6)(viia)(I)(B) of the Act.

(3.) WE have heard counsel for the parties. We have carefully considered the facts of the case. We are of the clear opinion that the assessee being eligible to get the benefit of exemption under S. 10 (6)(viia)(I)(B) of the Act and the employer of the assessee having complied with all the requirements laid down in the Act for that purpose, the benefit cannot be denied to him because of delay on the part of the Central Government in according approval. In such cases the approval, once accorded, has to relate back to the date of the application. It is the only just and reasonable interpretation that can be given to such a provision.