Prakash Krishna, J. - (1.) The present income-tax reference is at the instance of the Department under Section 256(1) of the IT Act, 1961, hereinafter referred to as 'the Act' against the order of the Tribunal, dt. 14th Nov., 1983 for the asst. yrs. 1977-78 and 1978-79.
(2.) The following substantial questions of law have been referred for the opinion of this Court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in upholding the order of the AAC who accepted that the salary paid to foreign technician was neither earned nor accrued in India and, therefore, it was not taxable in India ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in upholding the order of the AAC who held that there is no relationship of employer and employees between the BHEL and the French technician and, therefore, the perquisites were also not taxable ?
(3.) Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in upholding the order of the AAC who held that the living allowance was taxable under the head of other sources ?" 3. The facts of the case in brief are as follows : Andre Perrian and Henry Martingngo are the French "non-resident" technicians, deputed by a French collaborator, namely, M/s Creausot Loire of France. The French collaborator has entered into an agreement with BHEL of India. The terms and conditions of deputation of French specialists of French collaborator company with the BHEL under the contract are as follows : (1) Salary paid by SFAC to the technical personnel for the period beginning from three days prior to their actual date of arrival in India till the end of the third day after their departure from India. Salary shall include, basic salary and all other allowances due and payable to the technical personnel under the SFAC's conditions of service for the time being in force. (2) Social charges paid in France on account of the employment of the technical personnel including but not restricted to the following, viz. : Employer's contribution for accidents in the course of employment; family allowances, social security retirement benefits, life insurance, accident insurance, unemployment insurance, apprenticeship tax and paid leave allowance. (3) Nine per cent of the total amount included in (1) and (2) above for covering the French company's miscellaneous expenses in relation to the administration of the technical personnel. (4) Cost of railway ticket including sleeper car charges in France from starting point to any European airport and back. (5) Cost of sea and railway transport of the luggage of the technical personnel and their families from the place of residence in Europe to the place of posting exceeding such free baggage allowance as permitted by air companies.;