TaxTMI 
TaxTMI 
2006 (11) TMI 139
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....art of a BG Group, leading international energy company that has expertise across spectrum of the natural gas chain. The applicant has assigned certain individuals including Mr. Manish Gupta to BG Group entities outside India. It is stated that Mr. Manish Gupta commenced employment with the Indian company in February/March, 2002 and that with effect from July 1, 2005 he was deputed to BG U.K. vide assignment letter dated 25.5.2005 for two years and has since been working in U.K. It is asserted that he would be spending less than 182 days in India in financial year 2005-06, therefore, he is a non-resident under explanation (a) to section 6 (1) of the Act. 3. The Commissioner in his remarks stated that in view of the stay of 88 days in India in the financial year 2005-06, the status of Mr. Gupta is that of resident in India. 4. In view of the comments of the Commissioner, the applicant was given a notice to show cause to explain as to how Mr. Gupta could be considered a non-resident in the light of Explanation (a) to section 6(1) of the Act; the case was directed to be listed for hearing. The applicant submitted his explanation stating that since Mr. Gupta is a citize....
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....f employment outside India, then in relation to that year he will be resident in India if he is in India for a period or periods amounting in all to 182 days or more. 7. The contention of the Commissioner that he has been in India for more than 60 days is supported by clause (c) of Section 6(1) of the Act but this ignores explanation (a) thereof. For the words "sixty days", occurring in sub-clause (c), the word "one hundred and eighty-two days" had been substituted by the explanation. If clause (c ) is read in the light of the Explanation (a), it is apparent that the stay of Mr. Gupta is less than 182 days (his stay is 88 days in India), therefore, he becomes a non-resident and thus the requirement of the tax liability of non-resident for the purpose of definition of "advance ruling" in Section 245N(a) of the Act is satisfied. We are unable to endorse the contention that since he is already in employment and is leaving India on deputation, he cannot said to leave India for employment. A careful reading of explanation (a) would show that the requirement of the explanation is not leaving India for employment but it is leaving India for the purposes of employm....
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....upta's salary received in India. Mr. Kartar Singh, Additional Commissioner, on the other hand, argued that the mandate of the provisions of law as contained in sub-section (2) of section 5 was very clear that any income received in India was subject of taxation laws of this country. Therefore, even if Mr. Nipun Pradhan and Mr. Manish Gupta were non-resident in the financial year 2005-06, the salary income received by them in India would be governed by the Act. It was also argued that both the employees were posted by the applicant to its group company in the U. K. on deputation basis, with salaries being paid by the Indian company in India, but certain allowances being paid by the group company in the U. K. There was no doubt, as regards the Indian salary, that the source of such salary income lay in India, since both the employees continued to be on the payroll of the Indian company in India even when they were posted in the U. K. Therefore, it could not be said that employment was exercised on behalf of the U. K. company. Also, by virtue of the express clause contained in the assignment letters dated March 26, 2003, and May 25, 2005, in respect of Mr. Nipun Pradhan and Mr. Manis....
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....oregoing issues and tile provisions of section 192 of the Act. In this connection, it will be useful to refer to section 5 of the Act, which lays down the scope of total income. The relevant provision of this section reads as under: "5.(1) ... (2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person;..." The above provision very clearly states that the total income of a non-resident includes all income from whatever source derived, which is received in India by or on behalf of such person. This leaves no manner of doubt that the Indian salary of the concerned employees of the applicant is taxable in India. In fact, the applicant has also fairly conceded that the salary received by Mr. Nipun Pradhan and Mr. Manish Gupta in India is chargeable to tax here. But it is contended by the applicant that because of the provisions of the Double Taxation Avoidance Agreement, no tax is actually payable in India. We may now turn to the issue of the Double Taxation Avoidance Agreement....
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....on Avoidance Agreement, which would prevail over the provision of section 5(2)(a) of the Act. It is, in fact, seen from the pleadings of the applicant, that in his tax return filed in the UK. for the financial year 2003-04, Mr. Nipun Pradhan has also included the salary received by him during this period in India. Thus, he has offered the Indian salary also for tax purpose in the U K. Chapter XVII of the Act deals with collection and recovery of tax. The purpose of the provisions of this Chapter, as contained in section 190, is that prior to the regular assessment being made, the tax on income shall be payable by deduction or collection at source or by advance payment, etc. A question arises whether tax at source can be deducted under this Chapter only if the income is taxable under the Act. The contention of the applicant is that chargeability to tax is a condition precedent for deduction of tax. In this connection, it has relied on the cases of CIT v. Cooper Engineering Ltd. [1968] 68 ITR 457 (Born) and Al Nisr Publishing, In re [1999] 239 ITR 879 (AAR). In Cooper Engineering Ltd.'s case [1968] 68 ITR 457 (Born), the question was deduction of tax on payment of interest to a non-....