TaxTMI 
TaxTMI 
2017 (9) TMI 808
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....ing Rs. 35,41,744/- less Rs. 100,000/- as deduction u/s. 80C of the Income-tax Act, 1961 (hereinafter referred to as the "Act") total non-taxable income being Rs. 34,41,740/- in form no. 1 instead of form no. 2 and claimed as relief u/s. 90/91 of the Act for Rs. 34,41,740/- as relief instead of exemption. The assessee is engaged for his service as Captain of the ship in a Foreign Shipping company (Crew). The assessee was paid Rs. 38,26,820/- which was credited in his NRE account after conversion of US dollar in India for which necessary FRC (Foreign Remittance Certificate) from Standard Chartered Bank, Mumbai have been submitted. 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 foreign shipping company. According to the assessee, he has to float on foreign water to render services during the course of voyage and accordingly when he was staying for more than 182 days outside India or on foreign water, his residential status need to be treated as 'Non-resident' as per provision of law and so his salary income which are r....
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.... my overseas employer by US dollars which is converted to INR and credited to my NRE account as per RBI Act. I am a crew of foreign going merchant vessel as Captain having Indian Passport. I have stayed in India less than 182 days and so my entire income should be non-taxable as per Act." 6. The AO examined the reply of the assessee and observed as under: "5. Reply submitted by the assessee is duly considered. However, assessee failed to apprise the issue taxability of his salary in India was being questioned on the basis of 'received in India' not on the basis accrued in India.' There is no dispute that during the assessment year 2012-13, the assessee was a non-resident engaged under a contract of employment signed with M/s MOL Manning Services S.A.(Panama). The contract stipulates the quantum of monthly salary and other perks payable to the assessee during the period of contract. However, the terms & conditions of the contract are entirely silent as regards to the place of payment of such salary. On perusal of copy of bank statement maintained with HSBC Bank, Main Branch, Kolkata it is observed that the assessee has received whole salary in India by way of....
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..... However, section 5(2) has subjected this scope to the other provisions of the Act. 10. The computation of total income is to be made in accordance with provisions contained in Chapter IV of the Act. In this regard, section 14 provides that unless it is provided otherwise, all income shall, for the purposes of charge of income-tax and computation of total income, be classified under the heads of income 'salaries', 'income from house property', 'profits and gains of business or profession', 'capital gains' and 'income from other sources'. Thus, any item of income must fall under one of these heads of income in order to be chargeable and for the purpose of computation of total income. 11. In the present case, assessee was not a resident of any other country, hence, only the provisions of the Income-tax Act, 1961 are applicable. From the Return of Income filed by the assessee, it is seen that assessee has squarely put the receipts under the head of income "salaries". Thus, for chargeability of income under this head and its computation, the provisions contained in Chapter IV of the Act shall apply. 12. Section 15 of the Act i....
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....ing else. It has no relation with location or place of services rendered or to where the amount has become "due". Thus, what is important for charging an amount to tax under section 15(a) is whether it is in the nature of salary and whether it has become due to the assessee ( whatever may be his status - resident or non-resident) and it has no relation to the place where it has become due. The place where it has become due and the place where service has been rendered do not form a basis of charge under section 15 of the Act. Had the Parliament thought it relevant, the statute would have taken a form w'hich reflected such thought. 17. In the present case, the amounts involved are in the nature of salary. Section 17 of the Act, inter alia, includes any fees, commissions, perquisites or profits in lieu of or in addition to salary or wages within the scope of the term 'salary'. The contract entered into by the assessee with the foreign party clearly suggests that the receipts are in the nature of salary. There is no dispute as to whether the amount has become due or not - as per the decision of the Hon'ble Supreme Court mentioned supra, an enforceable obligati....
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.... income received in India and any larger interpretation to the section would render it otiose. The various arguments of the assessee were summarized by the Ld. CIT(A) as below: "(a) The assessee is a non-resident and rendering services outside India. (b) The payments are being made by a foreign company outside India and the foreign company does not have any permanent establishment in India. (c) The point of payment is to be taken into consideration for determining the provisions of clause 5(2)(a) of the Income Tax Act and the point of payment shall be considered as the point of receipt. (d) It is immaterial that the payment is being transferred by the foreign company or remitted by the foreign company to the NRE account in foreign exchange in India as because payment have been made by the foreign company outside India and the point of payment is to be taken as the point of receipt. (e) Without prejudice to the above the amount which is received by the assessee from the foreign company is in foreign exchange and therefore income cannot be said to have been received in India where payments have been received in foreign currency. (....
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.... through any of the four modes as described in section 5(2) of the Act. It is evident that all the four modes stand on their own legs, otherwise the 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 n....
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....rs and for the sake of convenience, he instructed the foreign employer to send the monies to his NRE account in India. He stated that the argument of the 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....
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....AX IN INDIA FOR A NON-RESIDENT SEAFARER RECEIVING REMUNERATION IN NRE (NONRESIDENT EXTERNAL) ACCOUNT MAINTAINED WITH AN INDIAN BANK - CORRIGENDUM TOCIRCULAR NO.13/2017 [F.NO.500/07/2017-FT&TR-V], DATED 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.....