1993 (4) TMI 2

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....e income chargeable under the head "Salaries" occurring in the second proviso to sub-clause (iii) of clause (c) of section 40 fall for interpretation. The assessment year concerned is 1965-66. During the accounting year relevant to the said assessment year, the assessee paid to its foreign technical director a total remuneration of Rs. 66,000 including a sum of Rs. 28,576 paid by way of perquisite....

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....se the salary is exempt under section 10(6)(vii), the provision in section 40(c)(iii) does not cease to apply. Under the proviso to the said sub-clause, only an employee whose income chargeable under the head " Salaries " was Rs. 7,500 or less is exempted. Inasmuch as the income chargeable under the head " Salaries " in this case is more than Rs. 7,500, the exemption does not operate. Since the sa....

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....d 'Profits and gains of business or profession':..... (c) in the case of any company . . . (iii) any expenditure incurred after the 29th day of February, 1964, which results directly or indirectly in the provision of any benefit or amenity or perquisite, whether convertible into money or not, to an employee (including any sum paid by the company in respect of any obligation which but for suc....

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....n this case, the salary paid to the foreign technical director was admittedly exempt under section 10(6)(vii). The contention of the assessee which has been accepted by the High Court runs thus : the salary payable to the said director was exempt by virtue of section 10(6)(vii). In other words, it is nil for the purposes of the Act. If so, the second proviso to the sub-clause is attracted, inasmuc....