COMMISSIONER OF INCOME TAX Vs. HINDUSTHAN STEEL LTD

JUDGEMENT

(1.) The assessee prayed for reference of as many as four questions of law under Section 256(1) of the Income-tax Act, 1961, but the Tribunal has referred only two questions which are as follows :

(2.) This question has been reframed by us and will read as under :

(3.) The facts of the case as stated by the Tribunal are as follows : One Mr. L. Nemethy was a Canadian technician who came to India on May 5, 1965, to work with Hindusthan Steel, Durgapur. His services were initially approved for a period of three years and later extended up to May 4, 1969. For the extended period, exemption was not granted but the tax was to be paid by Hindusthan Steel Ltd. at the time of departure. Hindusthan Steel Ltd. gave a guarantee that if any tax is found to be payable by Mr. Nemethy, it would be paid by them. In fact, an assessment on the income of Mr. Nemethy had been made on the basis of the return filed for the assessment year 1969-70 and the salary received up to March 31, 1969, was assessed to tax.