2021 (4) TMI 954 - AT - Income Tax

Tribunal Grants Exemption Under DTAA for Foreign Income

Sri Ranjit Kumar Vuppu Versus Income Tax Officer (International Taxation) -II Hyderabad

The Tribunal allowed the assessee's appeal for A.Y 2014-15 against the CIT (A)-10, Hyderabad order dated 14.07.2020. The Assessing Officer was directed to ... 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 for A.Y 2014-15 against CIT (A)-10, Hyderabad order dated 14.07.2020.Analysis:1. Issue 1 - Claim of Double Taxation Relief:The assessee, a Nonresident individual, filed a return of income for A.Y 2014-15 admitting total income of Rs. 10,04,580. The Assessing Officer found discrepancies in the income filed and Form-16 details. The assessee claimed double taxation relief under section 90 of the I.T. Act but failed to provide necessary documents like Tax Residency Certificate and Assignment letter. The Assessing Officer disallowed the claim as the assessee couldn't prove the salary earned outside India and failed to produce supporting evidence. The employer had deducted tax at source on the entire salary, treating it as taxable in India. The Tribunal, in a similar case, held that non-production of Tax Residency Certificate shouldn't prevent granting treaty benefits if sufficient circumstantial evidence is provided.2. Issue 2 - Tax Residency Certificate Requirement:The Assessing Officer insisted on the Tax Residency Certificate from Belgium for claiming Double Taxation relief under section 90. The assessee's argument of being a non-resident under section 6(1) of the Act due to spending less than 60 days in India was not accepted. The Tribunal, referencing previous cases, emphasized that the Act should not override treaty benefits if the taxpayer provides enough evidence. The Tribunal directed the Assessing Officer to delete the tax imposed on the assessee's salary income earned outside India, as per the DTAA provisions.3. Issue 3 - Treatment of Salary Income and Allowances:The Assessing Officer raised concerns about the salary and allowances received by the assessee, stating that they were taxable in India. The employer had deducted tax at source on the entire salary paid to the assessee. The Tribunal, relying on DTAA provisions and previous judgments, ruled in favor of the assessee, directing the Assessing Officer to allow exemption under the DTAA and delete the tax imposed on the salary income earned outside India.4. Final Decision:The Tribunal allowed the assessee's appeal for A.Y 2014-15 against the CIT (A)-10, Hyderabad order dated 14.07.2020. The Assessing Officer was directed to grant exemption under the DTAA, considering the salary income and allowances earned by the assessee outside India. The Tribunal's decision was based on the principle that treaty benefits should prevail over domestic laws if the taxpayer provides sufficient evidence, even in the absence of specific documents like the Tax Residency Certificate.(Order pronounced in the Open Court on 22nd April, 2021.)