AIR INDIA Vs. SRIVASTAVA V K CIT

JUDGEMENT

(1.) AIR India, a corporation incorporated under the Air Corporations Act, 1953, appointed Ludovico Reister, a highly qualified chef, from September 23, 1969, to September 22, 1973, in the flight kitchen of the corporation. Section 10(6)(vii) of the Income -tax Act 1961, exempts the income earned by a foreign technician in India subject to the conditions specified in that section. Section 10 of the Act, inter alia, provides that for computing the total income of a previous year of any person, the remuneration due to or received, chargeable under the head 'Salaries' for services rendered as a technician in the employment of the corporation shall not be included provided the remuneration in pursuance of the contract of service in the case of a technician who has special knowledge and experience in industrial or business management techniques, is received by him during the period of sic months commencing from the date of his arrival in India. In the case of any other technician, such remuneration ins received during the 36 months commencing from the date of arrival in India. The expression 'technician' is defined under the Explanation and means a person having specialised knowledge and experience in constructional or manufacturing operations or industrial or business management techniques. The section also requires that the employment of such person is approved by the Government of India.

(2.) ON May 1970, the petitioners had applied for approval of the contract of service with Reister and the Government of Indian conveyed the approval by letter dated June 26, 1970. Initially, the approval was for a period of one year commencing from September 23, 1969. The approval was subsequently extended from time to time till September 22, 1973. It is not in dispute that Reister left the country on September 22, 1973, after obtaining clearance from the income -tax authorities. Till the time of departure of Reister, the assessment for the assessment years 1973 -74 and 1974 -75 was not completed and, therefore, the petitioners furnished a bank guarantee to the income -tax authorities undertaking to bear the tax liability, if any.

(3.) BY two notices dated February 28, 1978, addressed to Reister and delivered to the petitioners, the Income -tax Officer called upon them to show cause why the proceedings should not be adopted in accordance with section 147(b) of the Act. Respondent No. 2 claimed in the notices that there was reason to believe that Reister's income chargeable to tax for the assessment years 1973 -74 and 1974 -75 had escaped assessment within the meaning of section 147 of the Act. Pursuant to the notices, the petitioners filed returns, inter alia, protesting that respondent No. 2 had no jurisdiction to reopen the completed assessment and in any event the petitioners were not agents of Reister. The petitioners complained that respondent No. 2 issued notices only on the basis of the audit objection and that fact is not sufficient to exercise jurisdiction. The contention raised by the petitioners was not accepted and the draft assessment orders were issued by respondent No. 2. The Income -tax Officer proposed to assess the petitioners in a total income of Rs. 4,63,558 for the assessment year 1973 -74 and Rs. 2,99,334 for the assessment year 1974 -75. The Income -tax Officer by order dated March 24,1979, amended the order to correct certain mistakes. The petitioners, feeling aggrieved, approached the Inspecting Assistant Commissioner and the Assistant Commissioner directed the Income -tax Officer to complete the assessment. The petitioners preferred appeals before the Commissioner of Income -tax (Appeals) against the order of reassessment for the two assessment years. The appeals were dismissed as incompetent and further appeals to the Income -tax Appellate Tribunal also ended in dismissal on the ground of maintainability. The petitioners thereafter made representations to the Central Board of Direct Taxes but the Board informed the petitioners that it is not possible to interfere with the matter.