2016 (3) TMI 15

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..... 8,25,792/- received in India (from the sister concern of US employer) for the services which are undisputedly rendered in United States (U.S.) and is exempt from Indian Taxation under Article 16(1) of the India-U.S. Double Taxation Avoidance Agreement (DTAA). (iii) Charging interest U/s 244A and 234D thereon." Ld. Counsel contends that impugned assessment has been framed by ld. AO treating the assessee as non-resident, which is further evident from the fact that the case of the assessee was transferred from ITO, Ward 3(3), Jaipur to Assistant Director of Income Tax (International Taxation), Jaipur who framed the assessment. During this year, the assessee was transferred from India subsidiary to Fidelity Investments Systems Inc....

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.... arisal or deemed accrual or arisal which is more important criteria rather than receipt of income. Therefore, if an income is accrued or deemed to accrue outside India then it has to be taxed on accrual or deemed accrual basis rather than receipt basis. The assessee summarized its arguments as under: a) the assessee was a non resident in India during the PY. 2007-08. b) the provisions of Section 5 are subject to the other provisions of the Act and cannot tax an amount which is otherwise outside the ambit of taxation. c) Salary is chargeable to tax on due basis and therefore, his salary cannot be taxed in India on receipt basis. d) He was a resident in USA for the PY 2007-08. e) While di....

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....Tax Act, 1961. The claim of exemption of income amounting to Rs. 8,25,792/- out of the above on the basis of Article 16(1) of India-USA Double Taxation Avoidance Agreement by the assessee is not correct. 3. Aggrieved, the assessee preferred first appeal before the ld CIT(A), who erroneously held that the assessee remained on the payroll of FBSI and was not on the payroll of FIS, that is the reason his salary was credited by FBSI in India and TDS was deducted thereon. In view of the section 5(2) of the Act, total income of any previous year of a person who is a resident includes all income from whatever source derived which is received or deemed to be received in India in such year by or on behalf of such person on accrues or arises to hi....

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....art and this amount has been reimbursed to Indian entity by Fidelity Investment, Boston, USA. Thus the essence of the tax liability as perceived by authorities below is not relevant issue i.e. rendering of services in USA but a merely because the amount was paid by an Indian entity and TDS was deducted thereon. Looking at the small amount, the India entity did not apply for exemption U/s 192/193 of the Act. Besides in law the salary was not taxable in India consequently assessee also did not raise any objection for such TDS. Besides the Indian entity was to be reimbursed by the US entity. In view of these undisputed facts and circumstances the salary in question is not taxable in India being clearly exempt u/a 16(1) of DTAA. Further relianc....