COMMISSIONER OF INCOME TAX Vs. GOSLINO MARIO

JUDGEMENT

(1.) THE following questions of law have been referred to this Court under the provisions of S. 256(1) of the IT Act, 1961, for its opinion :

(2.) OF the aforesaid questions, the first question has been referred at the suggestion of the CIT and the rest on the prayer of the assessees. The broad facts leading to the reference are these. The assessee are technicians who came to India to work with the Fetilizer Corporation of India Ltd. (FCI) at Namrup, Assam. The services of the assessee -technicians were obtained by the FCI under an agreement of the assessee -technicians were obtained by the FCI under an agreement with an litalian concern Montecatini Edison (subsequently called Technimont) which deputed them to work with the FCI. Under the agreement, the salaries of the assessees were to be paid by the FCI in Italian lire to the said Italian concern but the daily allowances were to be paid directly to the assessees in Indian rupees. Apart from the aforesaid remuneration to be made available to the assessees they were also provided these facilities : (1) Free of charge furnished residential accommodation at the site; (2) furnished office accommodation free of charge at the site; (3) free of cost transport facilities for official work; and (4) free medical aid for the personnel and their families to the extent available at FCI medical centre at site.

(3.) THE claim of the assessees that the salary and allowances were not taxable in India was not accepted by the ITO who completed the assessment under S. 143(3) of the IT Act, 1961, hereinafter referred to as the Act. The matter was carried in appeal before the CIT(A). The appellate authority took into consideration the various decisions of the Tribunal and the points raised in the appeal and held that the assessees should be treated as employees of the foreign company, and that their assessable salary income and daily allowances should be taken on the basis of the certificates issued by the foreign company. The appellate authority accordingly directed the ITO to recompute the income of the assessees on that basis. The CIT(A) further held that the assessee are not entitled to exemption under S. 10(14) in respect of daily allowances and rent -free quarters provided to the assessees. The latter was taken to be a perquisite as defined under S. 17 (2)(i).