1987 (11) TMI 5 - SC - Income Tax

Deduction under Section 80RRA for remuneration abroad includes consultants and technicians, not limited to salary; appeal dismissed.

Interpretation of a tax deduction provision concerning remuneration paid abroad: the court construed 'remuneration' broadly and rejected limiting it to ... Deduction under Section 80RRA - Salary received by an employee abroad - term 'remuneration' - expressions ' employee ' and ' employer ' - Whether the sum was received from 'any employer ' - HELD THAT:- It appears to us to be plausible objects in the present socioeconomic context. We find that the amplitude of the expressions ' employee ' and ' employer ' covers the cases of a consultant or a technician. We find in the scheme of the section nothing to warrant any exception as contended for by the Revenue. If we read the section with the object of the section in View as suggested by Mr. Palkhivala, then there is no warrant to restrict the meaning in the manner canvassed by the Revenue before us. Mr. Ahuja, however, drew our attention to the objects appearing in clause 31 of the Finance Bill, 1975, which later on became the Act. We find nothing in clause 31 to suggest a restricted meaning as canvassed by Shri Ahuja. ' Employ ' means use of services of persons. It follows, therefore, that it comprehends a whole-time servant or a part-time engage. It is significant that section 80RRA of the Act uses the expression ' remuneration ' and not salary to be entitled to deduction. In the aforesaid view of the matter, we see no warrant to restrict the meaning of the expression ' remuneration ' only to salary received by an employee abroad. The literal meaning is clear and we need not bother any more about the intention or the purpose. The intention, in our opinion, is writ large. In principle also, we are unable to find any rationale or reason for the distinction sought to be made on behalf of the Revenue. Thus, we are of the opinion that the High Court was right in dismissing the appeal, and we find no reason to interfere with the order of the High Court. The appeal, therefore, fails and is accordingly dismissed without any order as to costs. Issues: Whether the deduction under Section 80RRA of the Income-tax Act, 1961 applies to remuneration received in foreign currency by an Indian technician/consultant (i.e., fees paid to a consultant) from a foreign employer for services rendered outside India.Analysis: The Court examined the language of Section 80RRA, noting that the section refers to 'remuneration' received in foreign currency from 'any employer' for services rendered outside India and prescribes conditions such as approval of terms by the Central Government and a 36-month limitation. The Court compared the terms used in Section 80RRA with related statutory language and the stated object of the provision in the Finance Bill, concluding that the statutory words were not limited to salaried employment. The Court considered established definitions and authorities on the meaning of 'employer' and 'employee', and held that the expressions are not technical and can encompass part-time engagement, consultants, or technicians whose services are utilised by a foreign enterprise. The Court rejected Revenue's submission that the section should be confined to salaried employees only, finding no textual or contextual basis for such a restriction.Conclusion: The deduction under Section 80RRA applies to remuneration received by an Indian technician/consultant from a foreign employer for services rendered outside India; fees paid to a consultant in the circumstances fall within 'remuneration' and the appeal by the Revenue is dismissed.