2024 (2) TMI 606 - AT - Income Tax

Tribunal Upholds Non-Resident's Tax Exemption, Citing UK Residency and DTAA Benefits; Salary Income Not Taxable in India.

Debarghya Chattopadhaya Versus DCIT, International Taxation, Circle-1 (1), Kolkata

Debarghya Chattopadhaya Versus DCIT, International Taxation, Circle-1 (1), Kolkata - TMI Issues involved:The appeal involves the question of taxability of salary income in India for a non-resident Indian who claimed relief under Double Taxation Avoidance Agreement (DTAA) supported by a Tax Residency Certificate from the United Kingdom.Issue 1: Taxability of salary income in IndiaThe assessee, a non-resident Indian, received salary from IBM India Pvt. Ltd. while working in the United Kingdom. The income was not offered for taxation in India as the assessee was a tax resident in the UK and had paid taxes there. However, the Assessing Officer (AO) denied the claim due to the absence of a tax residency certificate from the UK. The assessee submitted the certificate before the Commissioner of Income Tax (Appeals) [CIT(A)], which confirmed the AO's decision. Upon review, the Appellate Tribunal noted the valid tax residency certificate from the UK, confirming the assessee's residency status during the relevant period. The Tribunal found the assessee eligible for DTAA benefit under Section 90 of the Act and deleted the addition of the salary income, allowing the appeal.Issue 2: Consideration of evidence and remand reportThe assessee submitted the tax residency certificate during the appellate proceedings, which was acknowledged in a remand report by the AO. The report confirmed the validity of the certificate and the assessee's eligibility for DTAA benefit. Despite this, the CIT(A) did not allow the ground of appeal initially. The Tribunal, after reviewing the evidence and the remand report, concluded that the assessee possessed a valid tax residency certificate for the relevant period, justifying the claim for DTAA benefit. The Tribunal set aside the CIT(A)'s finding and deleted the addition to the salary income, thereby allowing the appeal in favor of the assessee.Conclusion:The Appellate Tribunal allowed the appeal filed by the assessee, ruling in favor of the non-resident Indian's claim for DTAA benefit based on the valid tax residency certificate from the United Kingdom. The Tribunal held that since the assessee had offered the income for taxation in the UK, the salary income was not taxable in India, leading to the deletion of the addition made by the tax authorities.