2021 (4) TMI 951 - AT - Income Tax

Assessee wins appeal for tax treaty benefits under India-Austria DTAA

Sri Vamsee Krishna Kundurthi, Hyderabad Versus Income Tax Officer (International Taxation) -1, Hyderabad

The Tribunal allowed the assessee's appeal, directing the Assessing Officer to grant exemption under the India-Austria DTAA. The Tribunal emphasized the ... Double taxation relief under section 90 - salary income and the foreign allowances - tax the salary income and the foreign allowance received by the assessee for services rendered outside India - assessee - a Non-resident individual, filed his return of income for the A.Y 2014-15 admitting “Nil” income - Form-16 issued by the assessee’s employer i.e., IBM India (P) Ltd Assessing Officer found that during the relevant A.Y, the gross salary of the assessee and the exempt income u/s 10 - HELD THAT:- In the case of Sreenivasa Reddy Cheemalamarri vs. ITO [2020 (4) TMI 226 - ITAT HYDERABAD] had considered similar issue held evidence was not produced for receiving the foreign allowance outside India and the bank account of the assessee maintained abroad was not produced is not relevant because the facts of the case establish es that the salary and the foreign allowance was received in India for the services rendered abroad and by virtue of DTAA and the Act, there is no bar in law for receiving the money in India. For the above-mentioned reasons, hereby direct the Ld.AO to delete the tax imposed on the assessee with respect to his salary income of ₹ 12,90,846/- and the foreign allowances Thus , the appeal of the assessee is allowed. The Assessing Officer is directed to allow exemption under DTAA. Issues:Assessee's appeal against CIT (A)'s order for A.Y 2014-15 - Claim of double taxation relief under section 90 - Nonresident individual's income scrutiny - Tax Residency Certificate requirement - Exempt income under section 10 - Salary details verification - Claimed TDS discrepancy.Analysis:1. Claim of Double Taxation Relief under Section 90: The assessee, a Nonresident individual, filed a return for A.Y 2014-15 with 'Nil' income but claimed TDS of &8377; 8,61,345. The Assessing Officer found discrepancies in the salary details and required the Tax Residency Certificate (TRC) for claiming relief under section 90. The assessee claimed exemption under Article 15(1) of India-Austria DTAA, stating non-taxability of salary earned in Austria. The AO disallowed the claim due to lack of TRC and supporting evidence for foreign allowances received outside India.2. Assessing Officer's Disallowance: The AO held that the assessee failed to provide TRC from Austria, necessary for claiming relief under section 90. Additionally, no evidence was presented for foreign allowances received outside India or salary earned in Austria. The Form-16 from the employer did not mention any allowances paid outside India, leading to the disallowance of the assessee's claim.3. Judicial Review and Precedents: The Coordinate Bench of the Tribunal considered a similar issue in another case and held that non-production of TRC should not prevent granting treaty benefits if sufficient circumstantial evidence is provided. The Tribunal emphasized the superiority of treaties over domestic laws in tax matters. The conditions under Article 15(1) of India-Austria DTAA were analyzed to support the assessee's claim of exemption.4. Decision and Relief: Relying on previous decisions and the provisions of the DTAA, the Tribunal allowed the assessee's appeal. The Tribunal directed the AO to grant exemption under the DTAA, considering the non-resident status in India and tax residency in Austria. The Tribunal emphasized the validity of the claim under Article 15(1) of India-Austria DTAA and ordered the deletion of tax imposed on the salary income and foreign allowances earned outside India during the relevant assessment year.5. Conclusion: The Tribunal's decision favored the assessee, emphasizing the applicability of DTAA provisions and the importance of treaty benefits in tax matters. The judgment highlighted the necessity of providing circumstantial evidence in cases where TRC is not obtainable and upheld the validity of the claim based on the conditions specified in the DTAA.