2008 (12) TMI 748 - AT - Income Tax

Tribunal directs assessee to prove overseas activities for tax purposes

ACIT Versus Ellis 'D' Rozario

The Tribunal allowed the Revenue's appeal, setting aside the decision of the ld. CIT(A) and directing the assessee to provide evidence regarding ... - Issues involved: Determination of tax liability on income earned by an individual, an Australian National, working as a Regional Manager in India for a company based in India but undertaking business travel outside India.Summary:1. The appeal was filed by the assessee against the order of the ld. CIT-XXX, New Delhi for the assessment year 2001-02. The dispute arose regarding the taxability of the income earned during the period when the assessee worked outside India. 2. The assessee, an Australian National, was employed as the Regional Manager, Indian Sub-Continent, based in India. The dispute arose when the Assessing Officer (AO) included the salary for the period when the assessee worked overseas as taxable in India, considering the headquarters of the employer to be in India.3. The ld. CIT(A) held that the remuneration earned during the period the assessee worked outside India was not taxable in India, as the assessee's residential status was resident but not ordinarily resident.4. The revenue appealed this decision, arguing that the terms of the contract required the assessee to work in specific places outside India for a particular period of time, making the salary received during the overseas visits taxable in India.5. The assessee contended that the Indian Liaison office could not be considered a permanent establishment, citing relevant case laws to support the exclusion of salary for the period spent outside India.6. The Tribunal observed that the contract did not specify a specific time frame for working outside India, and the assessee had undertaken activities related to Indian operations even during overseas visits. The issue was remanded to the AO for further determination based on evidence provided by the assessee.7. The Tribunal set aside the finding of the ld. CIT(A) and allowed the appeal of the Revenue for statistical purposes, directing the assessee to provide evidence regarding the activities performed outside India in relation to the Indian Liaison Office.8. The decision was pronounced on 05.12.2008, emphasizing the need for substantiating claims regarding the taxability of income earned during overseas visits.