AI Drafter 
TaxTMI 
TaxTMI 
1984 (7) TMI 157
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.... far as they are relevant for the disposal of this appeal before us, are as follows. The assessee is an individual and he worked as Senior Deputy Accountant General for a part of accounting year relevant to the assessment year 1980-81, viz., 1-4-1979 to 8-9-1979. There was a bilateral agreement between the Government of India and the Royal Government of Bhutan, whereunder India, with a view to participate in the development programme of Bhutan, agreed to depute its officers and technical personnel to Bhutan. Admittedly, the deputed Central Government servants would be governed by the terms and conditions mentioned in the order, dated 8-11-1977, passed by the Government of India as far as their service conditions, pay and emoluments during t....
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....ted for the period from 9-9-1979 to 31-3-1980, during which period the assessee worked as a deputationist under the Government of Bhutan and he was paid Bhutan compensatory allowance of Rs. 12,000. It was claimed before the ITO that the said compensatory allowance was exempt from income-tax under the provisions of section 10(7). The ITO, however, took the view that the exemption under the said section is allowed only when such allowances and perquisites were paid or allowed by the Government of India only. Inasmuch as in the case of the assessee, the compensatory allowance was paid not by the Government of India but by the Government of Bhutan, according to the ITO, the exemption under section 10(7) is not available to the assessee. Therefo....
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.... citizen of India for rendering service outside India shall not be included in his total income. " Therefore, as the clarification was given from the income-tax department in the case of one of the deputationists to the Government of Bhutan, it is claimed that the exemption under section 10(7) is available to the assessee also. This argument of the assessee prevailed upon the AAC, who held that the ITO's interpretation of section 10(7) is misconceived. He was of the view that the term 'paid or allowed', as enshrined in the provisions of section 10(7) are not specific to imply an interpretation that any allowances or perquisites paid only by the Government of India are eligible for exemption and the said exemption is not allowable if the ....
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.... 7. We have duly considered the arguments of the learned departmental representative and the written arguments sent by the assessee to the office of this Tribunal. In the written arguments, it is stated that the Government of India used to provide cash allowance of Rs. 18 crores a year by way of development subsidy to the Royal Government of Bhutan and mostly the pay and allowances of the deputationists used to be drawn from the said amount of subsidy. Therefore, it is found argued in the written arguments that the pay and allowances under the above circumstances should be deemed to have been paid indirectly by the Government of India itself and, therefore, assuming, without admitting, that the word 'Government' used in section 10(7) shoul....
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....isites which were either paid or allowed by the Government of India, are entitled to exemption under section 10(7). The Government of India already passed its order by a dated 8-11-1977, copy of which is filed before us by the revenue. It allowed Bhutan compensatory allowance at different slabs of pay. For instance, for employees drawing an Indian pay of Rs. 900 and below, the Bhutan compensatory allowance would be 150 per cent of the pay subject to a maximum of Rs. 850. For employees drawing over and above Rs. 900 of Indian pay, the Bhutan compensatory, allowance would be 125 per cent of the pay subject to a minimum of Rs. 1,350 and a maximum of Rs. 3,280. The subject of the notification dated 8-11-1977 reads "Terms for officers of the Cen....