AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2021 (6) TMI 706
X X X X Extracts X X X X
X X X X Extracts X X X X
....Floor, Back Portion, Model Town-3, Delhi - 110 009 wherein salary amounting to Rs. 19,25,067/- has been credited being salary from foreign enterprises i.e., ANGLO Eastern Ship Management Ltd., 23RD Floor, CEF Life Tower, 248, Queen's Road East, Wanchai, Hong Kong. On being questioned by the AO, it was submitted that the assessee has NRI status during the period under consideration and, during the year, the assessee had stayed outside India for more than 187 days and, therefore, is not liable to tax on the salary income earned abroad from a foreign employer. However, the AO was not satisfied with the arguments advanced by the assessee. He referred to the provisions of section 6 of the IT Act and held that the assessee was resident in India and salary income earned by him was taxable in India. He also referred to the definition of non-resident u/s 2(30) of the IT Act and noted that the assessee had spent more than 60 days in India and fulfilled the conditions envisaged under Clause (c) of section 6(1) of the IT Act, 1961. He rejected the explanation of the assessee that his income was not taxable in India by virtue of clause (a) of section 6(1). Rejecting the various explanations, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....who is a resident is received or is deemed to be received in India in such year by or on behalf of such person or accrues or arises or is deemed to accrue or arise to him in India during such year or accrues or arises to him outside India during such year, his such income is includible in the total income. In view of the above, it is clear that the Appellant's income even if not accrued or arisen in India would be taxable in India by virtue of clause (c) of section 5(1) of the IT Act. Though the fact is that the Appellant's income has been credited to an Indian branch of HDFC Bank. The other question to be decided in this case is whether the Assessee was resident in India or not for bringing the salary income earned from a foreign entity during the year under consideration. To be a resident in India either of the conditions given below are to be satisfied : "6. For the purposes of this Act, - (1)An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or (b).... (c) having within the four years preceding tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....risdictional tribunal. 5. That, Id. CIT(A) further erred in sustaining the addition by holding that even if income has not accrued or arisen in India still it shall be added u/s 6(l)(a) of Act and defeated the binding decisions of superior authorities. 6. That, Id. CIT(A), erred in sustaining addition of Rs. 1,75,000/-, even after admitting such payment by wife and addition is against all the cannons of law." 5. The ld. counsel for the assessee strongly challenged the order of the CIT(A) upholding the validity of reassessment proceedings as well as the addition on merit. So far as the validity of the reassessment is concerned, the ld. Counsel submitted that the case of the assessee was reopened for verification of purchase of immovable property amounting to Rs. 49,97,152/-. However, no such addition has been made on account of reasons for which the case was reopened. Relying on various decisions, he submitted that where there is no addition on the basis of reasons recorded, the AO loses jurisdiction to assess income under other heads or under other issue. For the above proposition, he relied on the decision of the Hon'ble Delhi High Court in the case of Ranbaxy....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee is in a much stronger footing because the foreign employer had not even deducted TDS since income had accrued outside India and was received outside India. He accordingly submitted that salary income added by the AO and upheld by the CIT(A) is not justified. 7.1 So far as 50% stamp duty sustained by the CIT(A) is concerned, he submitted that the assessee had enough withdrawals to meet the stamp duty expenses amounting to Rs. 1,75,000/- and, therefore, the CIT(A) was not justified in sustaining the addition. 8. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). So far as the validity of reassessment proceedings are concerned, he submitted that although the case was reopened for purchase of immovable property amounting to Rs. 49,97,152/-, however, it is a fact that the AO has made addition of Rs. 3,50,000/- on account of stamp duty for purchase of the property. Therefore, the argument of the ld. Counsel that the addition has not been made on account of the reasons for which the case was reopened and, therefore, the AO cannot make any other addition is without any basis and misplaced and cannot be accepted. The ld. CIT(A) has given justifiable reas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pholding the validity of the reassessment proceedings is upheld. 10. Now, coming to the addition of salary of Rs. 19,25,067/- is concerned, I find, the assessee, in the instant case, was employed with a foreign company and the salary accrued outside India. The assessee had stayed outside India for a period of more than 187 days, a fact brought on record by the AO and not controverted by the ld. DR. Under these circumstances, it has to be seen as to whether such salary income is liable to be taxed in India where the assessee was outside India for a period of more than 182 days and became a non-resident and the salary income was received outside India from a foreign employer for services rendered outside India. 11. I find, identical issue had come up before the coordinate Benches of the Tribunal in the case of Avdesh Kumar (supra). In that case, the AO, during the course of assessment proceedings had observed from the bank extract furnished by the assessee that it had received salary outside India (Korea) which had not been declared in the return of income and the assessee had also not claimed any relief u/s 90. The amount of such salary in Korean currency was converted into In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....annot be taxed in India when the assessee stayed outside India for more than 182 days. The relevant observations of the Tribunal from para 4 onwards read as under :- "4. The only issue involved is against the deletion of addition of Rs. 22,29,385/- made by the Assessing Officer by holding that the remunerations received by the assessee in respect of the employment in Russia and Tanzania are not taxable in India under the provisions of section 5(2)(a) of the Income-tax Act, 1961. 5. We have heard both the sides on this issue. After hearing, we find that during the relevant period, the assessee has stayed in India for 135 days. As per the provisions of section 6(1 )(a) and (c) read with Explanation (a) to section 6(1), the period of stay of an individual should be 180 days for being a resident in India. Thus, the status of the assessee was a nonresident. In view of this fact, the income can be taxed only with the provisions of section 5(2)(a) of the Income-tax Act, 1961. The assessee has rendered services outside India and the income has accrued outside India. The only issue is that whether the amount credited in the NRI account of the assessee located in I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....), I set aside the order of the CIT (A) and direct the Assessing Officer to delete the addition. 12. In the result, the appeal filed by the assessee is allowed." 12. Since the assessee, in the instant case, had stayed outside India for more than 182 days and had received salary from a foreign employer outside India for services rendered outside India, therefore, respectfully following the decision cited supra, I set aside the order of the CIT(A) and direct the AO to delete the addition. 13. So far as the addition of Rs. 1,75,000/- sustained by the CIT(A) on account of stamp duty is concerned, I find the same also is liable to be deleted under the facts and circumstances of the case. Admittedly, the AO has not made any addition on account of purchase of immovable property amounting to Rs. 49,97,152/- meaning thereby he has accepted the source of that huge amount. So far as the amount of Rs. 3,50,000/- towards the stamp duty is concerned, a perusal of the assessment order shows that the amount was paid by Mrs. Vandana Bhardwaj as per the ledger account of M/s Landcraft Developers Pvt. Ltd. which was reproduced by the AO in the body of the assessment order. Therefore....