JUDGEMENT
U.T. Shah, Vice-President -
(1.)IN view of contradicting decisions of the Division Benches of the INcome-tax Appellate Tribunal, the President of the INcome-tax Appellate Tribunal has constituted a Special Bench under Section 254(3) of the Act to decide the following issue:
Whether the expression 'any period of his employment outside INdia' used in Sub-clause (i) of Clause (b) of Section 40A(5) of the INcome-tax Act, 1961, applies only to cases of employees posted either temporarily or permanently abroad or whether it covers also the cases of employees who merely go on foreign tour in connection with the work of the employer?
(2.)The assessee is a company. The assessment year is 1979-80 and the relevant previous year ended on 30-11-1978.
During the relevant previous year, the assessee had sent two of its employees viz., S/Shri R.N. Langrana and A.E. Sequira on a foreign tour for few days. In its return of income, the assessee had worked out disallowance of Rs. 1,05,585 under Section 40A(5)/40(c) of the Act. In the draft assessment framed Under Section 143(3)/144B of the Act, the I.T.O. had worked out such disallowance at Rs. 1,48,250.
(3.)ONE of the objections raised by the assessee, against the aforesaid proposed disallowance of Rs. 1,48,250 worked out by the I.T.O. was the inclusion of proportionate salary/perquisite amounting to Rs. 29,948 paid to the aforesaid two employees while they were out of India on foreign tour. According to the assessee, the same should have been excluded in view of Section 40A(5)(b)(i) of the Act.
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