Singhal, J. - (1.) THE Tribunal has referred the following two questions of law arising out of its order dt. 29th April, 1985 in respect of the asst. yr. 1981-82 under s. 256(1) of the IT Act, 1961,-- "1.Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the absence fee of Rs. 23,318 is not includible in the hands of the assessee? 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that tax paid by the Indian company on behalf of the assessee-company cannot be grossed up?"
(2.) THE dispute relates to the agreement which was entered into by the assessee with Yamatake Honeywell Co. Ltd., Jaipur and to whom certain payments were made. This Court considered the matter in respect of statement of case sent by the Tribunal on the request of CIT vs. Yamatake Honey well Co. Ltd. (1994) 119 CTR (Raj) 347 : (1994) 210 ITR 470 (Raj) and it was observed as under:-- ".....From the facts of the aforesaid case, it would be evident that the assessment was sought to be made on the employee who has worked in India which is not the case in the present matter. THE amount which has been paid to the assessee was on account of business connection. THE various clauses of the agreement between the two companies were discussed in detail by the assessing authority and it cannot be denied that the relationship between the two companies was business relation and the amount which has been paid by the Indian company to the assessee-company was on account of business connection the amount which has been paid by the Indian company to the assessee-company cannot be considered to be salary paid to the two technicians. THEre was no relationship of employer and employee and the technicians were on deputation on behalf of the assessee-company. In the order of the CIT (A) which has been upheld by the Tribunal it has been held that the services could be rendered by the company itself through its employees and if the employees have been sent on deputation it could be said that the services were rendered by the company itself. As it has been found that the payment has been made by the Indian company on account of business connection and the corresponding expenditure cannot be claimed by the assessee-company since the same could be claimed in the assessment to be made in Japan, those deductions are not allowable in India. THE `absence fee' is in the nature of reimbursement or compensation of the amount which the assessee may be required to pay to its employees in Japan. It is not the exact amount which the assessee is paying by the way of salary to its employees but the amount fixed under the agreement irrespective of the actual payment and, therefore, so far as the assessee-company is concerned, it will be deemed to be the income in the hands of the assessee-company liable to be included in the total income for the purpose of taxation. THE assessee-company has not made the payment in India and, therefore, the expenditure could not be allowed." (p. 477) Since, the controversy is already settled by the view which has been taken by this Court, we are of the view that the Tribunal was not justified in holding that the absence fee of Rs. 23,318 is not includible in the hands of the assessee. We are further of the view that the tax paid by the Indian company on behalf of the assessee-company can be grossed up. The reference is answered in favour of the Revenue and against the assessee. No order as to costs.;