Foreign assignment salary for services abroad was not taxable in India merely because it was received in India.

Salary earned by a non-resident for services rendered in the United Kingdom was not taxable in India merely because it was credited in India. The Tribunal applied the settled rule that income from a foreign assignment remains outside Indian tax charge when the services are performed outside India, and noted that the earnings had been offered to tax in the UK with tax paid there. Relying on co-ordinate bench precedent on materially similar facts, it held that treaty relief was available and the foreign assignment salary was exempt in India.

---

---

Issues: Whether salary received in India for services rendered in the United Kingdom by a non-resident assessee was taxable in India, or exempt under the India-UK tax treaty.

Analysis: The assessee was found to be a non-resident during the relevant assessment year and had worked in the United Kingdom on foreign assignment. The record showed that the income from that assignment had been offered to tax in the United Kingdom on a grossed-up basis and that tax had been paid there, notwithstanding that the salary was credited in India and the employer had borne or reimbursed the tax. The Tribunal applied the settled principle that salary for services performed outside India is not taxable in India merely because it is received in India, and relied on co-ordinate bench precedent on materially identical facts.

Conclusion: The foreign assignment salary earned for work performed in the United Kingdom was not taxable in India, and the assessee was entitled to relief.

Ratio Decidendi: For a non-resident, salary attributable to services rendered outside India is not chargeable in India merely because it is received in India, and treaty relief follows where the income has been subjected to tax in the foreign State on the relevant assignment earnings.

---