TaxTMI 
TaxTMI 
2025 (8) TMI 833
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....L as exemption was claimed for the salary earned in Malaysia under Article 16 of the Double Taxation Avoidance Agreement ("DTAA") between India and Malaysia. Tax Deducted at Source ("TDS") amounting to Rs. 7,76,118/- which included the amount deducted by TCS India. 4. The Learned Assessing Officer ("the AO") passed the Assessment Order under Section 143(3) of the Income Tax Act ("the Act") on 24 February 2021 rejecting the Assessee 's claim of exemption made under the Article 16 of the Indo-Malaysia DTAA. The AO was of the view that since the Assessee is a Resident of Malaysia and a non-resident of India, he is not eligible to claim exemption under Article 16 of the DTAA. Не relied on the judgment of the co-ordinate Bench (Chennai) of the Tribunal in the case of Dennis Victor Rozario in ITA No. 298/CHNY/2016. 5. The Assessee preferred an appeal before the ld.CIT(A) who passed an order under section 250 of the Act on 03.10.2024 dismissing the appeal of the Appellant. The ld.CIT(A) was of the view that since the Assessee has received the salary in India, the same is taxable under section 5(2) of the Act. He also relied on the judgment of the Tribunal in the case....
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....ate. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, by an enterprise of a Contracting State may be taxed in that State. 10. The ld.AR furthermore submitted that the assessee qualified to be a Tax Resident of Malaysia. Therefore, applying the provisions of clause (1) of the above Article, the assessee's salary would be taxable only in Malaysia. Accordingly, the assessee has offered his income to tax in Malaysia and claimed an exemption for salary in India. 11. In this regard, the ld.AR relied on the order of the co-ordinate Bench of the Tribunal in the case Nanthakumar Murugesan IT(TP)A No. 12/Chny/2023 dated 10.06.2024 wherein the Bench has considered the earlier order in the case of Dennis Victor Rozario in ITA No. 298/CHNY/2016 (referred supra) that was relied upon by the AO and overruling the principle laid down earlier in Dennis Victor Rozario. Thus, the Bench allowed relief under the DTAA to the assessee in an identical situation. 12. The assessee also relied on the order of the co-ordinate Chennai Bench of the Tribunal in ....
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....The computation of total income of a Non-Resident has been stated in Section 5(2) of the Act and reproduced below: "5. Scope of total income: (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; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1.-Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2.- For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India." The other relevant provision in the act involved is Section 9(1) (ii) of the....
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....d which is equated to the place where services were rendered. This was affirmed by the Calcutta High Court in Utanka Roy v. DIT [390 ITR 109 (Calcutta)]. 21. Section 9(1) (ii) also guides that the situs of accrual of salary income is the situs of service rendered. The Tribunal, Agra Bench in Arvind Singh Chauhan vs. ITO (2014) 147 ITD 409 opined this view thereby affirming the ruling given in Avtar Singh Wadhwan case (2001) 247 ITR 260 (Bom) and further held that mere signing of the contract in India does not mean that the salary accrued in India. Therefore, for the purpose of better understanding, the need for classification between 'income being received' and 'amount being received' arises which is determined on the basis of character of income received. 22. The Authority for Advanced Ruling, New Delhi in the case of Texas instruments (India) Pvt Ltd A.A.R. No 1299 of 2012 stated that salary received in India by a Non-Resident employee in respect of services rendered outside India is said to be accrued outside India and cannot be taxable in India. 23. The Hon'ble Madras High Court took a similar view on the matter in the case CIT v. AP Kalyanakrishnan 195 ITR 534 (Mad.) ....
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....e liability to tax arises under the local enactment the provisions of sections 4 and 5 of the Act provide for taxation of global income of an assessee chargeable to tax thereunder. It is subject to the provisions of an agreement entered into between the Central Government and the Government of a foreign country for avoidance of double taxation as envisaged under section 90 to the contrary, if any, and such an agreement will act as an exception to or modification of sections 4 and 5 of the Income-tax Act. The provisions of such agreement cannot fasten a tax liability where the liability is not imposed by a local Act. Where tax liability is imposed by the Act, the agreement may be resorted to either for reducing the tax liability or altogether avoiding the tax liability. In case of any conflict between the provisions of the agreement and the Act, the provisions of the agreement would prevail over the provisions of the Act, as is clear from the provisions of section 90(2) of the Act. Section 90(2) makes it clear that 'where the Central Government has entered into an agreement with the Government of any country outside India for granting relief of tax, or for avoidance of double ta....