Employment status under a cross-border contract and salary tax gross-up were both governed by prior binding reasoning.

The employee-status question under the contractual arrangement was treated as governed by an earlier binding decision on the same point, and the court applied that reasoning to hold that the assessee served in India in the relevant capacity. The tax-on-salary issue was also treated as part of the same controversy, and the court held that grossing up on a tax-on-tax basis was required for inclusion as a perquisite. Both questions were answered in favour of the assessee, with no order as to costs.

---

---

Issues: (i) Whether the assessee served in India as an employee of the Indian corporation or as an employee of the foreign company under the terms of the agreement. (ii) Whether the tax on salary was required to be grossed up on a tax on tax basis for inclusion as a perquisite in the hands of the assessee.

Issue (i): Whether the assessee served in India as an employee of the Indian corporation or as an employee of the foreign company under the terms of the agreement.

Analysis: The controversy was covered by the earlier decision of the same court on the same legal question arising from the contractual arrangement between the parties. The court followed that decision and applied the same reasoning to the present reference.

Conclusion: The answer to this issue was in the affirmative, in favour of the assessee.

Issue (ii): Whether the tax on salary was required to be grossed up on a tax on tax basis for inclusion as a perquisite in the hands of the assessee.

Analysis: The second question was treated as part of the same controversy and was also governed by the earlier decision relied upon by the court.

Conclusion: The answer to this issue was also in the affirmative, in favour of the assessee.

Final Conclusion: The reference was answered in favour of the assessee on both questions, with no order as to costs.

Ratio Decidendi: Where the factual and contractual controversy is covered by an earlier binding decision on the same point, the court will apply that decision and answer the reference accordingly, including the treatment of salary-related tax as a perquisite.

---