TaxTMI 
TaxTMI 
2017 (6) TMI 644
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....aring total income at Rs. 2,09,021/-. The assessee is a Marine Engineer and was engaged with M/s. Marcator Lines Ltd, Singapore in the capacity as a Marine Engineer. The assessee was paid Rs. 23,71,727/- on the following dates as under:- 5.4.2010 3,08,291 HSBC A/c No. 028-0077710006 (NRE A/c) 3.5.2010 4,32,578 HSBC A/c No. 028-0077710006 (NRE A/c) 2.8.2010 2,14,876 HSBC A/c No. 255010100019938 (NRE A/c) 2.9.2010 4,41,187 HSBC A/c No. 255010100019938 (NRE A/c) 11.1.2011 2,23,700 HSBC A/c No. 028-0077710006 (NRE A/c) 9.2.2011 4,01,850 HSBC A/c No. 028-0077710006 (NRE A/c) 11.3.2011 3,49,245 HSBC A/c No. 255010100019938 (NRE A/c) TOTAL 23,71,727 4. The assessee stated that the above income was received from outside India in foreign currency and, therefore, claimed as exempt. The assessee stated that he used to get his contract to do service with Indian / foreign shipping company through Indian agent and that contract were executed in India duly signed by the agent in India and himself before joining the ship. But he has to float on foreign water to render services during the course of voyage and accordingly when he will stay more than 182 days out....
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....e observed that the law states income received in India is taxable in India in all cases (whether accrued in India or elsewhere) irrespective of residential status of the assessee. He also observed that it is significant to know the meaning of income received in India. If the place, where the recipient gets the money (on first occasion) under his control, is in India, it is said to be income received in India. In the instant case all the income was remitted by the employer to the bank accounts of the assessee maintained in India. Therefore, the assessee got the money under its control for the first time in India. Accordingly, the AO added a sum of Rs. 23,71,727/- as income chargeable to tax in India. In support of his proposition, he placed reliance on the Third Member decision of Mumbai Tribunal in the case of Capt.A.L.Fernandes vs ITO reported in 81 ITD 203 (Mumbai) (TM ) wherein it was held that the salary received by the assessee in India was taxable u/s 5(2)(a) of the Act. 7. On first appeal, the assessee argued that he was a non-resident and no income was taxable in India as entire service was rendered outside India. It was argued that assessee was under employment of a fore....
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.... received in foreign currency. (f) The provisions of Section 5(2)(a) has to be interpreted in the manner that it does not render the section meaningless. If interpretation as made out by the department is adopted, then definitely the section would be otiose and meaningless as because no benefit would be given to the non residents even if all the conditions have been satisfied. (g) The true interpretation to the provisions of section 5(2)(a) is that the meaning which is to be adopted for income received or deemed to be received in India, that the payments have been made in India in Indian currency and the recipient of the payments has received the payments in Indian currency." 8. The Ld. CIT(A) not convinced with the arguments of the assessee upheld the addition made by the Ld. AO. Aggrieved, assessee is in appeal before us on the following grounds: "1. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to uphold the addition made by the AO of Rs. 2371727/- as income u/s 5(2)(a) of the Income Tax Act is erroneous and contrary to the material facts on record. 2. That on the facts and in the circumstances of the case the action of the Ld. CIT(....
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....he enactment will be rendered redundant. Section 5(2)(b) mentions the term 'accrues or arises to him in India'. There is no specific section in the Act which deals with any income which accrues or arises to any person only in India. In other words, there is no section in the Act which provides for a charge on any income derived from any source on the basis of its accruing or arising specifically 'In India'. The context of this term is provided by section 5(1)(c) which, inter alia, mentions that the total income of a person resident in India includes all income from whatever source which 'accrues or arises to him outside India'. This is the reason that the main charging section, i.e. section 4, does not make any reference to the words 'in India' as it has to provide a basis of charge for both - income which is accruing or arising to a person in India as well as income which is accruing and arising to a person outside India. The charging section does not have a territorial bias. This is also the reason that neither does section 4 qualify a person as being resident or non-resident, nor does the definition of 'person' given in section 2(31) of th....
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.... assessee that what was brought into India is not the salary income but only the salary amount to India. Moreover, the ld AR had also not brought any material on record to prove that the assessee had the control over his salary income in international waters. He argued that if this argument of the assessee is to be accepted, then the assessee goes scot free from not paying tax anywhere in the world on this salary income. The provisions of section 5(2)(a) of the Act are probably enacted keeping in mind that income has to suffer tax in some tax jurisdiction. 10.2. The ld DR argued that this issue is decided in favour of the revenue by the order of this tribunal in the case of Tapas Kumar Bandhopadhyay vs DDIT reported in (2016) 159 ITD 309 (Kol Trib) dated 1.6.2016 on the very same set of facts. He also argued that the Circular relied upon by the ld AR would make the provisions of section 5(2)(a) of the Act itself unworkable and redundant. 11. We have heard the rival submissions and perused the materials available on record. We find that the decision relied upon by the ld DR, which was authored by the undersigned, was rendered by placing reliance on the Third Member decision of Mum....
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....F.NO.500/0 B7/A20N1K7 --F CTO&RTRR-IGV]E, NDDAUTMED 11-4- 2017 CIRCULAR NO. 17/2017 [F.NO.500/07/2017-FT&TR-V], DATED 26-4-2017 In line 4 of Paragraph No. 2 of the captioned circular, the word "foreign ship" may be read as "foreign going ship (with Indian flag or foreign flag)". 11.1. A perusal of the Circular referred to above shows that salary accrued to a non-resident seafarer for services rendered outside India on a foreign going ship (with Indian flag or foreign flag) shall not be included in the total income merely because the said salary has been credited in the NRE account maintained with an Indian bank by the seafarer. Remittances of salary into NRE Account maintained with an Indian Bank by a seafarer could be of two types : (i) Employer directly crediting salary to the NRE Account maintained with an Indian Bank by the seafarer ; (ii) Employer directly crediting salary to the account maintained outside India by the seafarer and the seafarer transferring such money to NRE account maintained by him in India. The latter remittance would be outside the purview of provisions of section 5(2)(a) of the Act, as what is remitted is not "salary income" but a mere transfer of a....