TaxTMI 
TaxTMI 
2026 (3) TMI 1175
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....ation, the CPC granted credit of Tax Deducted at Source (TDS) of Rs. 1,62,025/- as against TDS of Rs. 24,75,737/- claimed by the assessee in the return of income and reflected in Form 26AS, resulting in short grant of TDS credit of Rs. 23,13,712/-. 3. Aggrieved by the aforesaid intimation issued under section 143(1), the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee submitted that he was employed with Shell India Markets Private Limited (SIMPL) and during the relevant period he was deputed on a short-term international assignment to the United States of America from 29.05.2017 to 30.11.2018. It was contended that although the salary was processed through the Indian payroll and reflected in Form-16 issued by the employer, the assessee was a non-resident in India during the relevant year in terms of the provisions of section 6 of the Act and was resident of the United States for the calendar years 2017 and 2018 under the domestic tax laws of the USA. The assessee submitted that salary attributable to services rendered outside India during the said assignment period was not chargeable to tax in India in view of the provisions of section 5(2....
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....excluded a portion of salary income from taxation in India. Accordingly, the Ld. CIT(A) directed the Assessing Officer to tax the entire salary receipts as reflected in Form-16 and grant credit of TDS as per Form-16 and Form 26AS. Consequently, the appeal of the assessee was partly allowed subject to the above directions. 6. Aggrieved by the aforesaid order of the Ld. CIT(A), the assessee is in appeal before us raising various grounds challenging the jurisdiction exercised by the Ld. CIT(A), the adjudication of issues beyond the scope of proceedings arising from intimation under section 143(1), alleged enhancement of income without issuing notice under section 251(2), and the finding that salary earned for services rendered outside India is taxable in India without considering the provisions of section 90 of the Act and Article 16(1) of the India-USA DTAA. The grounds raised by the assessee are reproduced hereunder: Ground No.1: On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in adjudicating the appeal although the appellant had submitted that he was a Non-Resident during the year and the appeal should be transferred to the CIT(A)....
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....d. AR contended that such a direction issued by the Ld. CIT(A) effectively results in enhancement of the assessed income, which was not the subject matter of the intimation issued under section 143(1). It was further submitted that the Ld. CIT(A) has passed the impugned order without issuing any show cause notice as required under section 251(2) of the Act, before enhancing the income of the assessee. According to the Ld. AR, the action of the Ld. CIT(A) in deciding the taxability of salary income and directing taxation of the entire salary is beyond the scope of appellate proceedings arising from an intimation under section 143(1) and also violates the mandatory requirement of giving an opportunity before enhancement. 8. In support of the contention, the Ld. AR placed reliance on the decision of the co-ordinate bench in the case of Mridula Jha Jena v. ITO (ITA No. 4844/Mum/2024 dated 07.01.2025), wherein on similar facts the Tribunal held that salary earned for services rendered outside India by a non-resident is not taxable in India merely because the salary is credited to a bank account in India. 9. The Ld. Departmental Representative (DR), on the other hand, relied upon t....
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....y related to services rendered outside India during the period of international assignment. 13 The provisions of section 251(1) confer powers upon the CIT(A) to confirm, reduce, enhance or annul the assessment. However, section 251(2) specifically mandates that before enhancing the assessment, the assessee must be given a reasonable opportunity of being heard by way of a show cause notice. In the present case, nothing has been brought on record to demonstrate that the Ld. CIT(A) had issued any specific show cause notice proposing enhancement of the income of the assessee before directing the Assessing Officer to tax the entire salary receipts. In the absence of such notice, the direction issued by the Ld. CIT(A) cannot be sustained to the extent it amounts to enhancement of income without complying with the mandatory requirement of section 251(2) of the Act. 14 Nevertheless, since the Ld. CIT(A) has also examined the merits of the claim regarding taxability of salary earned during the overseas assignment, we deem it appropriate to examine the substantive issue as well. 15. The assessee has contended that during the relevant year he was deputed by his employer to the United....