TaxTMI 
TaxTMI 
2018 (8) TMI 751
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.... Limited and during the financial year 2012-13 was sent on short term assignment to Nigeria. He had stationed in Nigeria for 311 days during the year under consideration. Accordingly, his residential status for the year under consideration would be Non-Resident. During the year under consideration, the assessee had received the following emoluments from IBM :- a) Gross Salary received in India - Rs. 32,82,438/- and b) Foreign allowances on account of the international assignment received in Nigeria - Rs. 1,24,65,174/- IBM had effected TDS of Rs. 46,59,579/- on the entire emoluments paid to the assessee including the foreign allowances paid to the assessee u/s 192(1) of the Act. The assessee filed his return of income for the Asst Year 2013-14 declaring taxable income of Rs. 32,86,990/- (being the salary received in India alone and interest income) after claiming deduction of Rs. 1,11,405/- under Chapter VIA of the Act and claimed a refund of Rs. 38,19,000/- in his return of income. 3.1. During the financial year 2012-13, the assessee had received Rs. 1,24,65,174/- outside India for services rendered outside India . The assessee pleaded that the entire foreign allowance of Rs.....
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....ard is issued to the employee by Axis Bank Limited. Upon instructions from IBM, Axis Bank pays the amount of foreign assignment allowance to the international travel card of the employee outside India through its Nostro account situated outside India. A nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro Accounts are used to facilitate settlement of foreign exchange and trade transactions. A Nostro Account is always maintained outside India and denominated in Foreign Currency. In view of the same, since the foreign assignment allowances are paid from Nostro Account situated outside India to the International Travel Card outside India, the same is not taxable under section 5(2) of the Act in case of Non-residents. In this regard, we have also enclosed a letter issued by Axis Bank confirming that the amount is credited to the International Travel Card of the employees outside India through the Nostro Account maintained outside as Annexure 4....................................." The assessee furnished a letter issued by Axis Bank, Bangalore, addressed to IBM, wherein the details of its Nostro Accou....
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....ros, Dirhams and Saudi Riyals variants are also available on MASTERCARD platform. One can use the travel card in any country where VISA / MASTERCARD has acceptance. An individual does not need an account relationship with Axis Bank branch or the office of select full-fledged money changers (FFMC) and purchase an Axis Bank TCC as he can simply walk into any Axis Bank branch or the office of select FFMC and purchase an Axis Bank TCC over the counter. At the time of purchase of such a card for amounts exceeding $5000 , the purchaser has to mandatorily submit a copy of passport, copy of Visa issued by the country of travel, copy of airline ticket and Form A2. The usage of travel card is to be in strict accordance with the regulations of Exchange Control Regulation of the Reserve Bank of India (RBI) and in particular the Foreign Exchange Management Act, 1999 (FEMA). For employment abroad, i.e for a period who is proceeding to work abroad, the present FEMA limit if $100000 per financial year. He argued that thus it is Indian employer who extends this facility of TCC by depositing money in the card account by placing instructions to the bank. The card needs to be purchased / loaded /reloa....
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....at the first point of receipt for the assessee happens outside India. This money is used by him for his sustenance in Switzerland. Both the accrual and receipt of income happens outside India. Hence the same is outside the ambit of tax as per the provisions of section 5(2) of the Act. The services of the assessee are also utilized only outside India. g) This foreign assignment allowance is duly subjected to tax in the country of Switzerland and the assessee had duly paid the said tax to the Swiss Government. h) The assessee had paid taxes in India in respect of salary received by him in India, which is not in dispute. 7.2. We find that the ld DR had argued that the foreign assignment allowance given to the assessee is nothing but salary and that the same is first deposited in India and thereafter it gets loaded into the TCC by Axis Bank as instructed by IBM. In this regard, we find from the account statement of TCC enclosed in pages 130 to 145 of Paper Book for the period 30.11.1999 to 14.12.2015 , that the assessee is sent outside India with a TCC containing zero balance and the same is loaded/reloaded periodically as per the requirement . This loading or reloading of fun....
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....ment tax at Rs. 4,653/- on account of his interest income from bank deposits. Therefore, the appellant had claimed refund of Rs. 5,92,305/- by filing the return. The learned Assessing Officer submitted that the amount of Rs. 17,27,360/- was received by the appellant in Netherlands from his employment on account of foreign allowances, for which he produced certificate from the employer. The employer was non-resident during the year and provisions of Section 6(1) of the Act is applicable. Therefore, foreign allowances received by him outside the India for services rendered outside India are not liable to be taxed in India U/s 5(2) of the Act. He also relied on the various case laws, which were relied upon before the learned CIT(A), therefore, he prayed to confirm the order of the learned CIT(A). 6. We have heard the rival contentions of both the parties and perused the material on record. The appellant was non-resident during the year under consideration and allowances were received by him in Netherlands. The employer wrongly deducted TDS, the appellant had claimed refund on it. The Indian income has been considered by the appellant as taxable but the allowances paid outside the I....