COMM. OF INCOME TAX, CHD. vs. KUNIO IKAI

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ITA/458/2006HC Punjab & HaryanaPHHC01075182200623 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal was dismissed as no substantial question of law arose. The Tribunal's findings were accepted, which stated that the requirement for approval of the employment contract was removed by the Finance Act, 1992, making Central Government approval unnecessary. The Tribunal also held that a written contract stipulating employer payment of tax was not a legal requirement. The Authority of Advance Rulings in Monte Harris Vs. CIT was distinguished. The Tribunal found that the respondent was clearly engaged in rendering technical services as a technician in pursuance of the joint venture. The High Court agreed that the respondent, being a Telecom Engineer, was a technician and entitled to the exemption under the statutory provisions.

What were the facts?

The assessee, Mr. Kunio Ikai, a Japanese national, was employed to render technical services in connection with manufacturing telecommunication equipment and computers as part of a joint venture. For the assessment year 1993-94, he claimed exemption under Section 10(6)(viia) of the Income-tax Act, 1961, for tax paid by his employer on his salary. The Assessing Officer rejected the claim, citing the lack of Central Government approval for the employment contract and no clause stipulating employer payment of tax. The CIT(A) reversed this, and the Income Tax Appellate Tribunal dismissed the revenue's appeal. The revenue has appealed to the High Court.

What were the issues?

1. Whether, on the stated facts, the Income-tax Appellate Tribunal is correct in law in holding that the assessee is entitled to the benefit claimed under Section 10(6)(viia) of the Income-tax Act, 1961, in respect of salary, including perquisites received by him? 2. Whether, on the stated facts, the assessee would be considered as a 'technician' for the purpose of Section 10(6)(viia) of the Act? Assessee's contentions: Not recorded. Revenue's contentions: The Assessing Officer rejected the claim on the grounds that the employment contract was not approved by the Central Government and lacked a clause for the employer to pay the tax. The revenue appealed this reversal by the CIT(A) and the subsequent dismissal by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 10(6)(viia),Section 260-A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
I.T.A.No. 458 of 2006 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A.No. 458 of 2006 Date of decision:23.11.2006 Commissioner of IncomeTax, Chandigarh-II ...Appellant Versus Mr. Kunio Ikai ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE RAJESH BINDAL Present:Mr.S.K.Garg Narwana, Advocate for the revenue. ****

JUDGMENT This appeal has been preferred under Section 260-A of Income Tax Act, 1961 (for short “the Act”) proposing the following substantial questions of law arising out of the order dated 6.3.2006 of the Income Tax Appellate Tribunal, Chandigarh (for short “the Tribunal) passed in ITA No.4922/Chandi/2003 in respect of the assessment year 1993-94:- “1. Whether, on the stated facts of the case, the Income-tax Appellate Tribunal is correct in law in holding that the assessee is entitled to the benefit claimed by him under section 10(6) (viia) of the Income-tax Act, 1961 in respect of salary, including perquisites received by him?

2.

Whether, on the stated facts, the assessee would be considered as a 'technician' for the purpose of section 10(6) (viia) of the Act?” The respondent was employed for rendering technical service -2- in connection with manufacturing of telecommunication equipment and computers etc. in pursuance of the joint venture agreement dated 26.12.1991 with Punjab State Electronics Development and Production Corporation and Fujitsu India Telecom Ltd. He was a Japan national. During the financial year 1992-93, the respondent was in India and filed returns in respect of salary received. Exemption was claimed under Section 10(6) (viia) of the Income-tax Act, 1961(for short “the Act”) in respect of the tax covered by the statutory provisions. The respondent being Telecom -3- Engineer was clearly a technician and is entitled for exemption. In view of the above, we do not find that any substantial question of law arises for consideration of this Court.

The appeal is dismissed. (Adarsh Kumar Goel)

Judge November 23,2006 (Rajesh Bindal) Pka Judge

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