1. Taxability of salaries and allowances paid by a foreign entity and daily allowances paid by an Indian entity to deputed technicians. (Para 1 )
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1999 Supreme(SC) 508
SUPREME COURT OF INDIA
R.C.Lahoti : S.P.Bharucha
Commissioner Of Income Tax, Shillong
Versus
Goslino Mario
Case No. : 4153 of 1996
Date of Decision : 4/15/99
Salaries and allowances paid by a foreign entity to technicians deputed to an Indian entity are not taxable based on established precedent, and daily allowances paid by the Indian entity to such technicians are exempt under Section 10(14) of the Income Tax Act.
Headnote:(A) Income Tax Act - Section 10(14) - Salaries and allowances paid by a foreign entity to technicians deputed to an Indian entity - Taxability - The question of taxability regarding salaries and allowances paid by a foreign concern to its technicians deputed to work with an Indian concern is covered against the Revenue by established judicial precedent. (Para 1)
(B) Income Tax Act - Section 10(14) - Daily allowance paid by an Indian entity to deputed technicians - Exemption - Daily allowance paid by an Indian concern to technicians deputed from a foreign entity is exempt from tax under Section 10(14) of the Act. (Para 1)
Facts of the case:
A foreign entity paid salaries and allowances to its technicians who were deputed to work with an Indian company. Additionally, the Indian company paid a daily allowance to these technicians. The tax authorities challenged the tax-exempt status of these payments.
Findings of Court:
The court found that the taxability of salaries and allowances paid by the foreign entity was already decided against the Revenue by prior precedent. Furthermore, it affirmed that the daily allowance paid by the Indian entity was exempt from tax under Section 10(14) of the Act.
Issues: Whether salaries and allowances paid by a foreign concern to deputed technicians are taxable and whether the daily allowance paid by the Indian concern is exempt under Section 10(14) of the Act.
Ratio Decidendi: The court relied on existing precedent to determine that payments from the foreign entity were not taxable and held that the daily allowance paid by the Indian entity fell within the scope of exemption provided under Section 10(14) of the Act.
Result: Appeal dismissed affirming the answers given by the High Court.
Legal Category Hierarchy
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taxation
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income tax
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exemptions
- allowances (Para 1)
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exemptions
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income tax
Table of Contents
2. Dispute regarding the taxability of salaries and allowances paid by a foreign entity and daily allowances paid by an Indian entity to deputed technicians. (Para 1 )
3. Salaries paid by the foreign entity are covered by precedent, and daily allowances paid by the Indian entity are exempt under Section 10(14) of the Act. (Para 1 )
4. Daily allowances paid to technicians are exempt from tax under Section 10(14) of the Act. (Para 1 )
5. Appeal dismissed, affirming the answers given by the High Court. (Para 1 )
6. Are salaries and allowances paid by a foreign concern to technicians deputed to an Indian concern taxable?
The taxability of such salaries and allowances is governed by the legal principles established in the case of CIT v. S.R. Patton. (Para 1 )
7. Is a daily allowance paid by an Indian concern to deputed technicians exempt from tax?
Yes, daily allowances paid by the Indian concern to such technicians are exempt from tax under Section 10(14) of the Act. (Para 1 )
S.P.BHARUCHA, J.
(1) THE principal question relating to salaries and allowances paid by the Italian concern to its technicians deputed to work with FCI Ltd. is fairly stated to be covered against the Revenue by the judgment of this Court in CIT v. S.R. Patton. This covers the first four questions. The fifth question relates to the daily allowance that was paid by the Indian concern to these technicians. The Tribunal and the High Court have held that this daily allowance was exempt from tax under Section 10(14) of the Act and it appears to us that it cannot be argued to the contrary. The appeal is dismissed affirming the answers given by the High Court. No order as to costs.
