TaxTMI 
TaxTMI 
1994 (9) TMI 109
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.... (hereinafter referred to as GACL) on April 22, 1981. As part of this agreement SHINETSU lent services of these Technicians to GACL to advise and assist in the construction, erection, installation and start-up of the Plant. Para 5 of the agreement in so far as it is relevant to the remunerations paid by GACL to the assessees is in the following words : "5. Terms and conditions for SHIN-ETSU'S representatives dispatched to LICENSEE.--(1) All the following fees and expenses shall be borne by LICENSEE: (a) Absence fee of Japanese Yen Seventy Thousand (Y 70,000) per day for each day for each SHIN-ETSU'S representative away from his regular place of employment. (b) Out of pocket expenses of net Rs. 200.00 per day (excluding withholding ....
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....ed by him during his stay in India, provided the following conditions are fulfilled :-- (a) the foreign enterprise is not engaged in any trade or business in India; (b) his stay in India does not exceed in the aggregate a period of ninety days in such previous year; and (c) such remuneration is not liable to be deducted from the income of the employer chargeable under this Act." The Assessing Officer rejected the contention of the assessees as according to him, any amount earned by the assessee for rendering services in India becomes taxable within the meaning of section 17 of the IT Act read with section 10(6)(viia) of the Act. Accordingly, the Assessing Officer held that the amount received by the assessees as living allowance....
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....der: "In view of that, I am of the view, that the Assessing Officer has wrongly come to the conclusion that the condition laid down in clause (c) of section 10(6)(vi) is not fulfilled in this case. In my view the conditions laid down in all the three clauses i.e., (a), (b) & (c) of section 10(6)(vi) are fulfilled in this case and therefore the remuneration received by the appellant from GACL is exempt under the said section. On the facts of the case I hold that the provisions of section 10(6)(viia) are not applicable to the appellant's case. The appellant's learned counsel has also drawn my attention to Article VII of the agreement between the Government of India and the Government of Japan for the avoidance of Double Taxation which has ....
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....e of Double Taxation between India and Japan (Notification No. GSR 692, dated 13-6-1960) and submitted that all the conditions laid down in section 10(6)(vi) are applicable in the assessees' case and therefore their cases squarely fall under the provisions of section 10(6)(vi) and not under section 10(6)(viia) as erroneously assumed by the ITO. He further submitted that the assessees continued to be the employees of SHINETSU and during 72 days stay in India were never the employees of GACL. He further submitted that whatever remuneration was received from GACL for the various technicians, was shown as gross income of the Japanese company and it had paid tax on the same as per provisions of section 115A of the IT Act. He further submitted th....
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....ign enterprise [Emphasis supplied] and therefore when the Assessing Officer says that the conditions in clauses (a) and (b) are satisfied, he assumed that the assessees were employees of foreign enterprise. At the same time, the Assessing Officer states that clause (c) is not satisfied, apparently because such remuneration is liable to be deducted from the income or the employer chargeable under this Act and from this premises the Assessing Officer has proceeded to treat GACL as the employer of the assessees and not SHIN-ETSU company. In our view, the terms of the agreement between the two companies referred to supra make it abundantly clear that the assessees continued to be employees of SHIN-ETSU because it is SHIN-ETSU which agreed to gi....