Law: Income Tax Act, 1961

Section: 16

(a) Income-tax---Non-resident---Collaboration agreement between Indian company and foreign company---Employee of foreign company working in India as part of collaboration agreement---Remuneration payable to employee of foreign company remitted to foreign company---Amount remitted to- foreign company not taxable in hands of employee of foreign company---Indian Income Tax Act, 1961, S.16. (b) Income-tax----Salary---Deduction---Exemption---Collaboration agreement between Indian company and foreign company---Employee of foreign company working in India as part of collaboration agreement---Pocket allowance paid to employee by Indian company ---Assessee was not an employee of Indian Company but he received pocket allowance as an employee of foreign Company---Amount was assessable as salary in his hands---Pocket allowance not entitled to exemption under S.10(14)---Standard deduction could be claimed from pocket allowance---Indian Income Tax Act, 1961, Ss.10(14) & 16. The assessee was a non-resident working with an Indian Company between November 27, 1975 and June 16, 1976. The Indian Company had a collaboration agreement with an Italian collaborator company. The assessee was an employee of the collaborator company and had been sent to India at the instance of his employer in Italy to work as Chief Design Engineer at the Indian company. According to the letter containing the terms of employment of the assessee, he was appointed by the technical collaborator company as Chief Design Engineer to work with the Indian Company for a period of approximately three years (1095 days). Salary at the rate of 75 dollars per day was to be remitted to the collaborator company by the Indian company. He was entitled to pocket allowance at the rate of Rs.110 per day, free of taxes payable in India. Apart from the aforesaid two sums, he was also entitled to free furnished quarters, and transport to and from the works. The sums payable and money value of the free flat and transport provided by the Indian company was assessed as income from salary earned by the assessee during the assessment year 1976-77. The assessee contended that the remuneration at the rate of 75 dollars per day…

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