M.V. Nayar, A.M. - (1.) THE Department is in appeal against the order of CIT(A)-V New Delhi in appeal No. 429/94-95 dt. 11th Sept., 1995. THE grounds of appeal are as given below : "THE learned CIT(A) has erred in law as well as on facts in coming to the conclusion that the assessee was employed in a business carried on in India specially when he was an employee of M/s Cray Research UK Ltd. and was drawing his salary in sterling pound in UK. THE learned CIT(A) has erred in facts allowing exemption under Section 10(6)(viia) on the basis of a letter from Ministry of Science & Technology which was subject to fulfilment of all other terms and conditions of Section 10(6)(viia) which have not been fulfilled."
(2.) The assessee Mr. E. Stantone is a technician who was employed with M/s Cray Research India Ltd. during the period relevant to asst. yr. 1992-93. The AO asked the assessee to furnish the exemption obtained under Section 10(6)(viia) from the Central Government for a period exceeding 24 months. The assessee was also given a show cause as to why tax perquisite should not be grossed up under Section 195A as the tax had been paid by the employer. According to the AO the Mowing reply was given by the assessee in this regard ; "Please refer to your letter No. Dy. CIT/Spl.R-9/93-94/714 for asst. yr. 1992-93, In this respect, we have to state that we had applied for the approval to the Central Government for exemption under Section 10(6)(viia) of the IT Act, 1961 within 6 months of his arrival in India on 25th Oct. 1989 and thereafter for the extension on 1st May, 1991. However, the only approval granted was vide their letter dt. 19th Aug., 1992, after a lot of personal visits etc. thereafter we have checked up with the Deptt. of Science and Technology and we were informed that the approval granted was for the initial application as well as for the extension." The AO examined the contention of the assessee. He also felt that exemption could be granted if all the conditions stipulated in the section were satisfied, According to him, the exemption under Section 10(6)(viia) was available where the individual rendered services as technician in the employment of Government or local authority and such institution or body established in India for research, etc., was approved by the prescribed authority or in a business carried on in India for which the Central Government may waive the condition relating to sub-clause in the case of individual who is employed in India for designing, erection and examination of machinery or plant, etc. Further proviso to sub-section mentions that nothing shall relate to a period exceeding 24 months commencing from the date of his arrival in India unless approval of the central Government was obtained before the first day of October of the relevant assessment year. The AO also noted that the section had undergone a change w.e.f. 1st June, 1992, whereby the approval of the Government was not required but for accounting year 1991-92 such approval was essential. The assessee had not furnished the approval for extension of the contract beyond 24 months and, therefore, according to him, the exemption could not be granted. The AO also felt that the assessee had not furnished the details of actual receipt of salary or tax deducted at source nor full details of the person deducting the same and, therefore, according to him, the salary of the assessee had been paid either by the employer or M/s Cray Research (India) Ltd. and, therefore, had to be treated as a perquisite under Section 17(2)(iv). He, therefore, proceeded to gross up the tax as per provisions of Section 195A.
(3.) THE CIT(A) deleted the additions made by the AO. Against this, the Department is now in appeal before us.;