TaxTMI 
TaxTMI 
1981 (11) TMI 84
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....----------------------------------------------------------------------------------------------------------------------------------- Names of the countries Date of departure Date of arrival Amount of Amount of visited fromIndia back in allowance unspent &....
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....------------------------------------------------------------------------------------------ U.S.S.R. 18-7-1976 21-8-1976 20,853.88 8,737.50 Czechoslovakia,France United Kingdom,Italy United Kingdom, 4-10-1976 4-11-1976 20,421.00 7,195.62 France,United States ofAmericaItaly,Senegal, 30-11-1976 25-12-1976 19,987.80  ....
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....ance paid to them by the company for their foreign tours. 2. If so, what amounts were paid to them towards daily allowance for their foreign tours during the last three years and what amounts were saved by them individually as unspent money, which have been reimbursed to them against surrendered foreign exchange. 3. What action Government have taken in the matter? ANSWER ON 21-12-1978 1 and 2. The amount of foreign exchange paid as daily allowance to the executives of the Electronics Trade and Technology Development Corporation (ETTDC) and the amount of foreign exchange saved and converted into Indian currency during the past three years was as under: &....
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....--------------------------------------------- Chief Executive 6,365 3,237 87,118 35,718 31,148 7,107 Director (Finance & Administration) ---- ---- 11,395 4,229 ---- ---- Director --- ....
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.... allowance and savings, mentioned by the assessee and as mentioned in answer to R.S.Q. 1717, is due to the fact that the ETTDC Ltd. followed the accounting year which commenced on1-8-1976and ended on31-7-1977." 4. During the course of the assessment proceedings, the ITO required the assessee to explain why the unspent amount of the allowances sanctioned to him should not be taxed in his hands in view of the provisions of section 10(14). The assessee submitted that since the allowance was granted to him to meet his personal expenses necessitated by special circumstances in which the duty was performed as a Chief Executive of the said Corporation, no part of the allowance was required to be taxed. The ITO, however, did not accept the assessee's submission. He was of the opinion that the daily allowance to the extent to which it was spent would be exempt under section 10(14) but the amount which was not actually incurred would be taxable. He, therefore, brought to tax the sum of Rs, 24,244. 5. Aggrieved, the assessee filed an appeal to the AAC. It was argued that the allowance given to the assessee to meet his personal expenses necessitated by special circumstances in which the duty....
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.... deleted the sum of Rs. 24,244 from the assessment because that amount was not actually used for the purpose for which it was granted. He referred to the judgment in CIT V. Tejaji Farasram Kharawalla Ltd. [1968] 67 ITR 95 (SC), wherein it has been held that any surplus remaining in the hands of the grantee after meeting expenses does not bear the character of allowance for meeting expenses but for performing the duties of the office or employment and would be taxable. For the same submission he relied on the judgment in Sohanlal G. Sanghi v. CIT [1966] 61 ITR 203 (Bom.). He also submitted that the AAC was in error in taking into consideration the expenditure on dresses, travel goods, etc., and reciprocal expenditure on the visits of foreigners to India because such expenditure was not at all relevant for determining whether the sum of Rs. 24,244 was liable to be taxed or not. He submitted that the order of the AAC should be reversed and that of the ITO should be restored. 7. The learned counsel for the assessee did not dispute the fact that the entire sum of Rs. 69,291 was received from the employer in the course of performance of duties on behalf of his employer. He, however, sub....
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....s judgment had been followed in Bombay Dyeing & Manufacturing Co. Ltd. v. State of Bombay [1959] SCR 1122, Kohinoor Mills Co. Ltd. v. CIT [1963] 49 ITR 578 (Bom.), CIT v. Sandersons & Morganas [1970] 75 ITR 433 (Cal.), Bijli Cotton Mills (P.) Ltd. v. CIT [1971] 81 ITR 400 (All.) and CIT v. Motor & General Finance Ltd. [1974] 94 ITR 582 (Delhi). He very fairly conceded that the argument before the AAC regarding the expenditure on dresses, purchase of travel goods and the reciprocal hospitality to the foreigners while inIndiawas not relevant. He thus submitted that the order of the AAC was correct and did not call for any interference. 8. In reply the learned departmental representative submitted that the assessee had claimed exemption only under section 10(14) before the lower authorities and he should not, therefore, be allowed to build a new case and argue that the provisions of section 10(14) were not at all attracted. According to him, the cases relied on by the learned counsel for the assessee were not relevant. 9. We have carefully considered the rival submissions. The learned counsel for the assessee is correct in his submission that the quality and nature of a receipt for ....
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....r any head under the Income-tax Act. 10. The learned departmental representative had argued that the assessee should not be allowed to raise the argument that the sum of Rs. 24,244 was not income at all because before the lower authorities the claim was made only under section 10(14). We are unable to accept this contention because the AAC himself has held as under: "Since it was not a regular allowance, its nature was not income and the provisions of section 10(14) of the Act are not attracted." 11. It is not disputed on behalf of the assessee that the payment of Rs. 69,291 was received from the employer in the course of performance of duties and on behalf of the employer. Since the amount was received from the employer, the revenue can raise an argument that it is income which is taxable under the head "Salaries". In order to determine whether the disputed amount represents income taxable under the head "Salaries", we have to refer to the provisions of section 17 of the Act. The definition of the term "salary" given in section 17 is an inclusive definition and in section 17(1)(iv) "salary" includes any fees, commissions, perquisites or profits in lieu of or in addition to any ....