AI Drafter 
TaxTMI 
TaxTMI 
2004 (10) TMI 591
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.... into an agreement with M/s. Caterpillar Inc. USA (for short the "Caterpillar-USA") for supplying technical services and assistance of qualified individuals to co-ordinate the activities of the applicant. Pursuant to that agreement one Mr. Steven D. Dickinson, technician (hereinafter referred to as "technician") was deputed by Caterpillar-USA. The applicant paid US$ 115895 per annum to Caterpillar-USA, as fee for technical services, after deducting tax under section 195 of the Act. The technician received his salary in US $117627 from Caterpillar-USA. However, the applicant provided to the technician the following expenses and facilities free of income-tax : (i) Living expenses Rs. 35,000 per month, (ii) Furnished house, (iii) Air-fare and per diem expenses for the rest and recuperation travel once to Hong Kong and twice to Singapore every year, (iv) Home travel once a year to the U.S. for him and his family, (v) Car for official and personal use. On these facts the applicant sought rulings of the Authority on the following questions : (a) Whether, on the facts and in the circumstances of the case, the sum of US $ 115895 paid....
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....umn 8 provided by the applicant to Mr. Rodney D. Naron in India liable to be treated as perquisites and/or liable to be assessed as income in the hands of Mr. Rodney D. Naron in India ? (d) If the answer to question (c) above is in the affirmative, how are the aforesaid facilities to be evaluated and the basis for such valuation. (e) If the answer to questions (b) and (c) above are in the affirmative would Mr. Rodney D. Naron be eligible for the standard deduction applicable to salaries and/or any other deductions ; and if so the provision of law under which such deduction is to be claimed and the quantum thereof. The applicant in AAR No. 565 of 2002, Mr. Thomas E. Lawrence is a permanent employee of M/s. Caterpillar Asia P. Ltd. (a company incorporated in Singapore, which is also a 100 per cent. subsidiary of Caterpilliar Inc., USA). The applicant was deputed to M/s. Caterpillar Commerical P. Ltd. ("CCPL"), an Indian company which is a wholly owned subsidiary of Caterpillar-USA. In regard to the amounts paid and the facilities provided to the applicant, the following questions are framed for rulings of this authority : (a) Whether, on the facts and in....
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....e technician it is stated that the deduction is not permissible in computing his income in view of section 44D of the Act. Mr. V. Ramachandran, the learned senior advocate, appeared for the applicants in these applications. He submitted that he would not be seeking rulings on questions Nos. (a), (c), (d) and (g) in AAR No. 562 of 2002 and corresponding questions in the connected applications. It would be useful to refer to the accounting years, period of stay of the technician and his residential status in those years in India with reference to which the questions are to be answered. They are given in the following table : AAR No. 562 of 2002 S. No. Accounting year No. of days the tech nician was in India Remarks 1. 1999-2000 36 The technician was neither a resident nor an ordinarily resident in India ; 2. 2000-2001 247 He was a resident but not an ordinarily resident in India ; 3. 2001-2002 295 He was a resident but not an ordinarily resident in India ; 4. 2002-2003 (the employee left India on 31-10--2003) 307 He was a resident but not an ordinarily resident in India ; AAR No. 563 of 2002 S. No. Accounti....
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....can seek an advance ruling in relation to the tax liability of only a non-resident. It follows that now an application seeking an advance ruling in relation to the tax liability of a resident in India will not be maintainable. Question No. (b) in AAR No. 562 of 2002, question No. (a) in AAR No. 563 of 2002 and question No. (a) in AAR No. 565 of 2002 are common. On March 15, 2004, we passed an order calling upon the applicant in AAR No. 562 of 2002 to explain as to how it is entitled to advance ruling in view of the amendment of the definition of "advance ruling" and "applicant" by the Finance Act, 2003. The case was listed along with the other two applications. In the table of particulars of the technician in India it is already noted above that the employee was not a resident in India in the accounting year 1999-2000 (assessment year 2000-2001) so for that year the application would be maintainable. Similar orders were passed in the other two cases also. In AAR No. 563 of 2002, it was brought to our notice that in the accounting years 2001-2002 and 2002-2003 relevant to the assessment years in question, the technician was a non-resident and, therefore, the application was maint....
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....xable. In the case of technicians in these applications it is nobody's case that their income is derived from a business controlled or profession set up in India. Be that as it may, the applicants cannot rely on this provision because in the year in which the technicians are resident in India, the applications will not be maintainable. In these applications, we can deal with only such questions which relate to the tax liability of a non-resident. Therefore, we have no option but to reject the applications in respect of questions which relate to tax liability of the technicians in the assessment year in which they were residents in India. We shall proceed to pronounce ruling in respect of the tax liability of technicians in the assessment years in which they were non-residents in India in regard to the income arising to them outside India with reference to clause (ii) of sub-section (1) of section 9 of the Act which reads as follows : "9. Income deemed to accrue or arise in India.-(1) The following incomes shall be deemed to accrue or arise in India,-. . . (ii) income which falls under the head 'Salaries' if it is earned in India : Explanation.-For the ....
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....enses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit ; Clause (iiib) any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living." It is not seriously disputed that the benefits/facilities, which are the subject matter of the aforementioned questions, are covered by the said sub-clauses. What is, however, contended is that payment of special allowance, facility/ benefit are exempted under clause (14) of section 10 of the Act and therefore, cannot be included in the total income of a person. The contention is well founded and is not disputed by the Additional Commissioner and if we may say so "rightly". We shall with advantage refer to the following decisions here : CIT v. S. G. Pgnatale [1980] 124 ITR 391 (Guj). In that case the assessee was an employee of a French company. Pursuant to an agreement entered into by the French company with the Gujarat State Fertilizers Company, he worked in India as ....