COMMISSIONER OF INCOME TAX GUJARAT IV Vs. MASCALCHI MARIO

JUDGEMENT

(1.) AT the instance of the CIT, Ahmedabad, the Tribunal at Ahmedabad has referred under S. 256(1) of the IT Act, 1961, for our decision a question of law arising out of its order dt. 16th Feb., 1977. The question referred by the Tribunal at the instance of the Revenue is as under :

(2.) SO far as this question is concerned, it is fully covered by our decision rendered in IT Ref. No. 270 of 1977, decided today. Divan C.J., speaking for this Bench, has answered an identical question of law arising from similar facts against the Revenue and in favour of the assessee. In the light of the aforesaid decision, the aforesaid question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.

(3.) IN order to appreciate this objection on behalf of the Revenue, it is necessary to have a brief reference to certain salient facts of this case. The relevant year of assessment is 1972 73. The assessee is an individual and his status is "not ordinarily resident". The assessment in question relates to the income under the head "Salary". The period 22nd Aug., 1971, to 31st March, 1972, is the previous year. The ITO, Circle III, Ward A, Baroda, assessed the total income at Rs. 52,360 as against the declared "nil" total income. In his return, the assessee had shown receipt of Rs. 18,213 as " living allowance " but his contention was that the said income was exempt by virtue of the provisions of S. 10(14) of the Act. The assessee has also shown in the return a receipt of Rs. 29,521 being retention remuneration. But his contention was that the said remuneration was not taxable as according to the assessee, the provisions of S. 5(1)(c) of the Act were not applicable to the said remuneration. The ITO negatived both the contentions of the assessee. The assessee preferred an appeal before the AAC, A Range, Baroda. That appeal was wholly dismissed and the order passed by the ITO was fully maintained by the AAC. The assessee thereafter preferred a second appeal to the Tribunal at Ahmedabad. The Tribunal partially allowed the appeal in so far as the retention remuneration received during the relevant period by the assessee was concerned. The Tribunal took the view that the said remuneration was not earned by the assessee in India and hence it had not accrued or arisen in India and, therefore, it was not includible in the computation of the assessee's total income. So far as the assessee's contention regarding non payability of tax on living allowance went the Tribunal took the view that the living allowance paid to the assessee during the relevant year constituted a " perquisite " within the meaning of S. 17(2) of the Act and consequently was includible in his total income. It was further held by the Tribunal on this aspect that exemption under S. 10(14) or S. 16(v) was not attracted regarding the said receipt. The Tribunal took the view that the benefit of exemption under S. 10(6)(vii)(a) to the extent of the rate mentioned in that provision was attracted to the said receipt. Thus, it is clear that the Tribunal's order at Annexure 'B' to the paper book was partly in favour of the assessee and partly against him.