Expatriate living allowance exemption upheld where deputed employees retained Indian posting and allowance met additional tour expenses.

Delay of 723 days in filing the appeal was condoned after the Tribunal accepted the explanation supported by affidavit, noted the matter was already covered by an earlier order in similar cases, and found sufficient cause in the interests of substantial justice. On the tax issue, the living allowance paid to employees deputed to the USA for specific projects was held exempt as an allowance to meet additional expenses incurred in the performance of duties, because their Indian posting and salary structure continued and the allowance was not shown to be ordinary salary or excessive. The addition made on that account was deleted.

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Issues: (i) Whether the delay of 723 days in filing the appeal should be condoned. (ii) Whether the living allowance received by an employee deputed to the USA was exempt as allowance paid to meet expenses incurred wholly, necessarily and exclusively in the performance of duties of office or employment, and whether the addition made on that account was sustainable.

Issue (i): Whether the delay of 723 days in filing the appeal should be condoned.

Analysis: The delay was explained by affidavit stating loss of the appellate order, repeated foreign travel for work, family medical , and late procurement of the certified copy. The Tribunal also noted that the controversy was covered by an earlier order in similar matters. In the interests of substantial justice, the explanation was accepted.

Conclusion: The delay was condoned and the appeal was admitted.

Issue (ii): Whether the living allowance received by an employee deputed to the USA was exempt as allowance paid to meet expenses incurred wholly, necessarily and exclusively in the performance of duties of office or employment, and whether the addition made on that account was sustainable.

Analysis: The Tribunal followed its earlier decision on identical facts and held that the deputed employees had not changed their place of posting to the USA but were sent for specific projects while continuing to receive salary and benefits in India. The allowance was paid to meet additional routine expenses during the tour, and the mere fact that it was paid monthly or that detailed vouchers were not produced did not make it ordinary salary. The Tribunal also held that the availability of family accompaniment, visa status, or the non-resident cases relied upon did not alter the character of the allowance. The absence of proof of actual expenditure did not defeat the exemption unless the allowance was shown to be disproportionately high or unreasonable.

Conclusion: The living allowance was held exempt and the addition was not sustainable.

Final Conclusion: The appeal succeeded in full, with the delay in filing condoned and the exemption claim accepted, resulting in deletion of the disputed addition.

Ratio Decidendi: Where employees are deputed abroad for specific projects but continue to retain their Indian posting and receive salary and benefits in India, the allowance paid to meet additional expenses of the tour qualifies for exemption, and actual expenditure proof cannot be demanded unless the allowance is shown to be excessive or unreasonable.

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