2017 (1) TMI 952 - AT - Income Tax

Non-resident's tax appeal partially allowed, key issues remitted for verification.

Shri Ravishankar Rajendran Versus The Income Tax Officer, International Taxation II, Chennai

The Tribunal partly allowed the appeal for statistical purposes and remitted certain issues back to the Assessing Officer for verification and ... Salary earned in India - number of days of stay in India - India UK DTAA - work on deputation - Held that:- It is an admitted fact that the assessee is a non-resident. And the assessee has stayed more than 180 days outside India. It is also a fact that the assessee was employed in IBM India Pvt. Ltd., though, he was deputed to do company’s work at UK, but he remains the employee of IBM India Pvt. Ltd. Therefore, the law of India are applicable in assessee’s case. CIT(A) has observed that the assessee was paid at the home location of the company i.e., India and the assessee has not independently earned any income outside India. The assessee earned salary income in India from his employer for the services rendered at UK and therefore, the salary earned in India is taxable as per section 5(2) of the Income Tax Act. In view of the above and as per DTAA, the assessee can claim exemption if he is resident of India. Since the assessee being non-resident, the ld. CIT(A) has held that the assessee is not eligible to claim exemption under Article 16(1) of the DTAA and accordingly confirmed the disallowance made by the Assessing Officer. Before us, the ld. Counsel for the assessee sought for permission for filing of additional supporting evidence by stating that the foreign allowances were received by the assessee outside India. After considering the submissions of the assessee, we are of the opinion that the additional evidence filed before the Tribunal were not filed before the authorities below. Thus, we remit the matter back to the Assessing Officer to verify the evidences filed by the assessee and decide the issue afresh - Decided n favour of assessee for statistical purposes. Issues Involved:1. Taxation of entire salary income of a non-resident in India, including foreign allowances.2. Disallowance of exemption claimed under Article 16(1) of India-United Kingdom Double Taxation Avoidance Agreement.3. Disallowance of loss from house property.4. Disallowance of deduction for tax on employment.5. Disallowance of deduction under Section 80D of the Act.6. Levy of interest under Section 234B and 234D of the Act.Analysis:1. The appeal concerns the taxation of the entire salary income of a non-resident in India, including foreign allowances. The assessee, an employee of a company in India, was on an international assignment in the UK. The Assessing Officer brought to tax the salary received by the assessee in the UK, rejecting the claim that it was not taxable in India. The CIT(A) upheld the taxability of the salary earned in India as per the Income Tax Act, stating that the laws of India apply to the assessee, a non-resident. The relief under the Double Taxation Avoidance Agreement (DTAA) with the UK was denied as it can only be claimed by a resident of India. The Tribunal remitted the matter back to the Assessing Officer for verification of additional evidence regarding the remittance of foreign allowances received outside India.2. The second issue involves the disallowance of the exemption claimed under Article 16(1) of the India-UK DTAA. The CIT(A) confirmed the disallowance, stating that the assessee, being a non-resident, was not eligible for the exemption. The Tribunal allowed the assessee to file additional supporting evidence and remitted the matter back to the Assessing Officer for verification.3. The third issue pertains to the disallowance of loss from house property. The Tribunal directed the Assessing Officer to verify if the assessee had claimed such a loss and adjudicate accordingly.4. The fourth issue relates to the disallowance of a deduction for tax on employment. The Tribunal allowed this deduction as per Section 16(iii) of the Act.5. The fifth issue concerns the disallowance of a deduction under Section 80D of the Act. The Tribunal directed the Assessing Officer to verify and allow the deduction after proper verification.6. The final issue involves the levy of interest under Sections 234B and 234D of the Act. The Tribunal noted that since the matter of quantum addition was remitted back to the Assessing Officer, no adjudication was required on the interest levy.In conclusion, the Tribunal partly allowed the appeal for statistical purposes and remitted certain issues back to the Assessing Officer for verification and adjudication.