Law: Income Tax Act, 1961

Section: 10

(a) Income-tax----Charge of tax---Dividend from companies in Ceylon---Gross dividend is chargeable to tax and not net amount after deducting tax at source and cost of foreign exchange entitlement certificate. (b) Income-tax--- ----Exemption---Special allowance or benefit---Daily allowance---Not a travel allowance ---Assessee received daily allowance for performing duties of his office as director---Exemption for daily allowance cannot be allowed under Expln. to S.10(14)---Indian Income Tax Act, 1961, S.10(14), Expln. Held, (i) that the gross dividend declared by the companies in Ceylon was chargeable to tax and not the net amount after deducting the tax at source and-the cost of foreign exchange entitlement certificate. Mrs. Meherbai N. Sethna v. CIT (1994) 209 ITR 453 (Bom.) fol. (ii) That the head office of the company was situated at Bombay and the assessee was ordinarily a resident of Gwalior and as such he was coming from Gwalior for performing duties of his office as Director at Bombay. Therefore, he could not claim exemption under the Explanation to section 10(14) of the Income Tax Act, 1961, in respect of allowance received by him for performing his duties as Director in office at Bombay. JUDGMENT S.H. KAPADIA, J.---At the instance of the assessee, the following two questions of law have been referred to this Court for opinion under section 256(1) of the Income Tax Act, 1961, in respect of the assessment year 1973-74: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the gross dividend declared by the companies in Cylon was chargeable to tax and not the net amount after deducting the tax at source and the cost of foreign exchange entitlement certificate? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the travel allowance received by the applicant from Scandia Investment (Pvt.) Ltd.…

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