Ravishankar Rajendran, CHENNAI V. ITO, CHENNAI

ITA 1064/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3989 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 22-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 19-04-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Residential status; Salary income; Double taxation relief; Opportunity of being heard; Services rendered outside India; Additional evidence; Corroborative evidences
• Section: 143(3); 5(2); 234B

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 1064 /MDS/201 6 / ASSESSMENT YEAR :20 11 - 12 SHRI RAVISHANKAR RAJENDRAN, PLOT NO. 68, FIRST MAIN ROAD, LAZAR NAGAR, KAMARAJ NAGAR, AVADI, CHENNAI 600 071. [PAN:A FXPR9746Q ] VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION II , CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI NAGESWAR RAO, ADVOCATE / RESPONDENT BY : SHRI A.V. SREEKANTH , JCIT / DAT E OF HEARING : 22 . 0 9 .201 6 / DATE OF P RONOUNCEMENT : 23 . 1 1 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) 1 6 , CHENNAI , DATED 2 9 . 0 1 .20 1 6 RELEVANT TO THE ASSESSMENT YEAR 20 11 - 12 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. T HAT THE CIT(A) HAS GROSSLY ERRED IN FACTS AND LAW IN TAXING ENTIRE SALARY INCOME OF NON - RESIDENT ASSESSEE IN INDIA, INCLUDING FOR EIGN ALLOWANCES RECEIVED OUTSIDE INDIA. I.T.A. NO . 985 /M/ 15 2 2. WITHOUT PREJUDICE, THE ORDER OF THE CIT(A) IS PERVERSE, SINCE THE ISSUE OF TAXABILITY OF FOREIGN ALLOWANCES IS DECIDED ON AN INCORRECT ASSUMPTION THAT SUCH ALLOWANCES ARE RECEIVED IN INDIA. 3. THAT THE CIT (A) HAS GROSSLY ERRED IN FACTS AND LAW IN DISALLOWING THE EXEMPTION CLAIMED UNDER ARTICLE 16( 1 ) OF INDIA - UNITED KINGDOM DOUBLE TAXATION A VOIDANCE AGREEMENT. 4. THE CIT(A) HAS ERRED IN LAW AND FACTS, BY NOT ALLOWING LOSS FROM HOUSE PROPERTY OF .147 ,18 7. 5. THAT THE CIT(A) HAS GROSSLY ERRED IN FACTS AND LAW IN UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234 B AND 2340 OF THE ACT AMOUNTING TO . 37,150. 2. B RIEF FACTS OF THE CASE ARE THAT D URING THE YEAR RELEVANT TO THE ASSESSMENT YEAR, THE ASS ESSEE WAS AN EMPLOYEE OF THE COMPANY IBM INDIA PRIVATE LIMITED. DURING THE YEAR UNDER CONSIDERATION, HE WAS ON INTERNATIONAL ASSIGNMENT TO UNITED KINGDOM ('UK') AND PAID SALARY AMOUNTING TO . 1,297,605 / - FROM IBM FOR THE SERVICES RENDERED BY HIM. OUT OF WH ICH, THE ASSESSEE HAS RECEIVED GROSS SALARY IN INDIA OF . 1,078,550 / - AND RECEIVED . 219,055 / - IN UK. HE FILED HIS RETURN OF INCOME CLAIMING THE STATUS OF 'NON - RESIDENT INDIVIDUAL' DECLARING TOTAL INCOME AS N IL . THE ASSESSEE THUS CLAIMED T HAT THE SALARY RE CEIVED FROM IBM INDIA PRIVATE LIMITED, CHENNAI OF . 1,112,223 / - WAS NOT TAXABLE IN INDIA. THEREFORE , HE CLAIMED REFUND OF . 170,170 / - BEING THE TAXES DEDUCTED AT SOURCE. THE CASE WAS SELECTED FOR SCRUTINY. AFTER CONSIDERING THE CLAIM OF THE ASSESSEE AND AL SO BY CONSIDERING ARTICLE 16 AND ARTICLE 24 OF DTAA WITH U.K., THE ASSESSING OFFICER HAS I.T.A. NO . 985 /M/ 15 3 OBSERVED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME IN THE STATUS OF NON - RESIDENT STATUS AND ONLY BY A RESIDENT OF INDIA CAN CLAIM THE DEDUCTION. THE REFORE, THE A SSESSING O FFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT HIS FOREIGN SALARY INCOME WAS EXEMPT FROM TAX AND BROUGHT TO TAX THE S ALARY RECEIVED BY HIM IN UK. THUS, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 [ AC T IN SHORT] BY ASSESSING THE TOTAL INCOME AT . 1,190,400 / - OF THE ASSESSEE . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND FILED DETAILED WRITTEN SUBMISSIONS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS RELEVANT DTAA , THE LD. CIT(A) HAS OBSERVED AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND VARIOUS CASE LAWS REFERRED ABOVE AND RELIED BY THE APPELLANT AND IT IS FOUND THAT THE FACTS OF THE CASE LAWS REFERRED ABOVE ARE CLEARLY DISTINGUISHABLE ON TH E FACTS OF THE CASE HENCE THE DECISION IS TAKEN BY REFERRING TO THE STATUTORY PROVISIONS OF THE INCOME TAX ACT AND DTAA BETWEEN UNITED KINGDOM AND INDIA IT IS A FACT THAT APPELLANT IS A EMPLOYEE OF IBM INDIA PRIVATE LIMITED, THOUGH HE IS PUT ON ASSIGNMENT TO GET COMPANY'S WORK DONE AT UNITED KINGDOM BUT HE REMAINS THE EMPLOYEE OF IBM INDIA PRIVATE LIMITED AND ACCORDINGLY THE LAWS OF INDIA ARE APPLICABLE IN THE CASE OF APPELLANT. ASSESSEE IS PAID AT THE HOME LOCATION OF THE COMPANY THAT IS IN INDIA AND HAVIN G A BANK ACCOUNT IN INDIA AT HOME LOCATION. THUS THE COMPANY SENDS HIM ON ASSIGNMENT ABROAD FOR CARRYING OUT COMPANIES WERE INDEPENDENTLY ASSESSEE IS NOT EARNING INCOME OUTSIDE INDIA, IT IS FOR HIS SERVICES RENDERED OUTSIDE INDIA THE GENERATION OF INCOME I N THE HANDS OF ASSESSES TAKES PLACE IN INDIA ITSELF THEREFORE THE SALARY EARNED IN INDIA IS TAXABLE AS PER SECTION 5(2) OF THE INCOME TAX ACT SCOPE OF TOTAL INCOME. 5. (1) SUBJECT TO THE PROVISIONS OF THIS ACT, THE TOTAL INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED WHICH - I.T.A. NO . 985 /M/ 15 4 (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; OR (C) ACCRUES OR ARISES TO HIM OUTSIDE INDIA DURING SUCH YEAR : PROVIDED THAT, IN THE CASE OF A PERSON NOT ORDINARILY RESIDENT IN INDIA WITHIN THE MEANING OF SUB - SECTION (6) OF SECTION 6, THE INCOME WHICH ACCRUES OR ARISES TO HIM OUT SIDE INDIA SHALL NOT BE SO INCLUDED UNLESS IT IS DERIVED FROM A BUSINESS CONTROLLED IN OR A PROFESSION SET UP IN INDIA. (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 AC CRUING 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 REC EIVED BY HIM IN INDIA. NOW IT IS ISSUE BEFORE ME THAT ASSESSEE CAN BE GIVEN BENEFIT OF DTAA, AS PER ARTICLE 24 OF THE DTAA IT IS MENTIONED AS UNDER 'SUBJECT TO THE PROVISION OF THE LAW OF INDIA REGARDING THE ALLOWANCE AS A CREDIT AGAINST INDIAN TAX PAI D IN A TERRITORY OUTSIDE INDIA(WHICH SHALL NOT AFFECT THE GENERAL PRINCIPLE HERE OF) THE AMOUNT OF THE UNITED KINGDOM TAX PAID, UNDER THE LAWS OF THE UNITED KINGDOM AND IN ACCORDANCE WITH THE REVISIONS OF THIS CONVENTION, WHETHER DIRECTLY OR BY DEDUCTION, B A RESIDENT OF INDIA IN RESPECT OF INCOME FROM SOURCES WITHIN THE UNITED KINGDOM; WHICH HAS BEEN SUBJECTED TO TAX BOTH IN INDIA I.T.A. NO . 985 /M/ 15 5 AND THE UNITED KINGDOM SHALL BE ALLOWED AS A CREDIT AGAINST THE INDIAN TAX PAYABLE IN RESPECT OF SUCH INCOME BUT IN AN AMOUNT NOT EXCEEDING THAT PROPORTION OF INDIAN TAX WHICH SUCH INCOME BEARS TO THE ENTIRE INCOME CHARGEABLE TO INDIAN TAX' THUS IT IS CRYSTAL DEAR THAT THE RELIEF UNDER' DTAA CAN BE CLAIMED ONLY BY A RESIDENT OF INDIA, THEREFORE ASSESSEE IS NOT ELIGIBLE TO EXEMP TION U/A 16(1) OF DTAA WITH UNITED KINGDOM. THEREFORE THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE EXEMPTION CLAIMED U/A 16(1) OF DTAA WITH UNITED KINGDOM. AND ACCORDINGLY I CONFIRM THE ASSESSING OFFICER BRINGING ON TAX AMOUNT OF RS.1288005/ - AS SALAR Y INCOME TAXABLE IN INDIA THEREFORE THE GROUNDS OF APPEAL ARE DISMISSED. ON THE GROUND OF APPEAL THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND FACTS, BY NOT ALLOWING LOSS FROM HOUSE PROPERTY OF RS. 147,187 IN THE ASSESSMENT ORDER WHICH IS IN AP PEAL AGAINST THERE IS NO MENTION OF ANY HOUSE PROPERTY INCOME THEREFORE THE GROUND OF THE APPEAL ON THIS ISSUE IS DISMISSED. ON THE GROUND OF APPEAL THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND FACTS, BY NOT GRANTING DEDUCTION FOR TAX ON EMPLOY MENT AMOUNTING TO RS 2,190 UNDER SECTION 16(III) OF THE ACT. THE CONTENTION OF THE APPELLANT IS ACCEPTABLE AND ASSESSING OFFICER IS DIRECTED TO GRANT THE DEDUCTION OF TAX ON EMPLOYMENT AMOUNTING TO RS 2,190/ - . THIS GROUND OF THE APPEAL IS ALLOWED . ON THE GROUND OF APPEAL THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND FACTS, BY NOT GRANTING DEDUCTION UNDER SECTION 80D OF THE ACT AMOUNTING TO RS.1,250. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE SAME AFTER PROPER VERIFICATION. THIS GROUND OF APP EAL IS ALLOWED. ON THE GROUND OF APPEAL THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND FACTS IN LEVYING INTEREST OF RS 17,028 UNDER SECTION 234B AND RS 20,122 UNDER SECTION 234D OF THE ACT ON THE AFORESAID ADDITIONS MADE TO THE TOTAL INCOME OF T HE APPELLANT. CHARGING OF INTEREST UNDER SECTION 234B AND UNDER SECTION 234D IS MANDATORY AS PER THE STATUTORY PROVISION OF THE ACT AND IT IS CONSEQUENTIAL TO THE ASSESSED INCOME ARRIVED AT THEREFORE THIS GROUND OF APPEAL IS DISMISSED. 4. ON BEING AGGRI EVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BY FILING COPY OF AXIS B ANK TRAVEL CURRENCY CARD ACCOUNT, THE LD. COUNSEL FOR I.T.A. NO . 985 /M/ 15 6 THE ASSESSEE HAS PRAYED FOR ADMISSION OF THE ADDITIONAL SUPPORTING EVIDENCE WITH REGARD TO REMITTANCE OF FOREIGN ALLOWANCES R ECEIVED BY THE ASSESSEE OUTSIDE INDIA ALONG WITH A CERTIFICATE FROM AXIS BANK CERTIFYING THE NATURE OF THE TRANSFER INTO THE AXIS TRAVEL CURRENCY CARD AND SUBMITTED THAT THE FOREIGN ALLOWANCES AMOUNTING TO .219,055 WERE RECEIVED BY THE ASSESSEE OUTSIDE INDIA. HE ALSO SUBMITTED THAT THE ASSESSEE HAS SUBMITTED COPY OF INDIAN HDFC BANK ACCOUNT BEFORE LOWER AUTHORITIES TO SUBSTANTIATE THAT FOREIGN ALLOWANCES WERE NOT RECEIVED IN THE ASSESSEE S INDIAN BANK ACCOU NT. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AUTHORITIES BELOW HAVE WRONGLY ALLEGED THAT THE FOREIGN ALLOWANCES WERE RECEIVED IN INDIA AND PRAYED THAT THE EXEMPTION CLAIMED UNDER ARTICLE 16(1) OF DTAA WITH UK SHOULD BE ALLOWED. 5. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE SUPPORTING EVIDENCE WITH REGARD TO REMITTANCE OF FOREIGN ALLOWANCES RECEIVED BY THE ASSESSEE HAS NOT BEEN FILED BEFORE THE AUTHORITIES BELOW AND THE SAME CANNOT BE ENTERTAINED. 6. WE HAVE HEARD BO TH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE IS A NON - RESIDENT. AND THE ASSESSEE HAS STAYED MORE THAN 180 DAYS OUTSIDE INDIA. IT IS ALSO A FACT THAT THE A SSESSEE WAS EMPLOYED IN IBM INDIA PVT. LTD., THOUGH, HE WAS DEPUTED TO DO COMPANY S WORK AT UK, I.T.A. NO . 985 /M/ 15 7 BUT HE REMAINS THE EMPLOYEE OF IBM INDIA PVT. LTD. THEREFORE, THE LAW OF INDIA ARE APPLICABLE IN ASSESSEE S CASE. THE LD. CIT(A) HAS OBSERVED TH AT THE ASSESSEE WAS PAID AT THE HOME LOCATION OF THE COMPANY I.E., INDIA AND THE ASSESSEE HAS NOT INDEPENDENTLY EARNED ANY INCOME OUTSIDE INDIA . THE ASSESSEE EARNED SALARY INCOME IN INDIA FROM HIS EMPLOYER FOR THE SERVICES RENDERED AT UK AND THEREFORE, THE SALARY EARNED IN INDIA IS TAXABLE AS PER SECTION 5(2) OF THE INCOME TAX ACT. IN VIEW OF THE ABOVE AND AS PER DTAA, THE ASSESSEE CAN CLAIM EXEMPTION IF HE IS RESIDENT OF INDIA. SINCE THE ASSESSEE BEING NON - RESIDENT, THE LD. CIT(A) HAS HELD THAT THE ASSESSE E IS NOT ELIGIBLE TO CLAIM EXEMPTION UNDER ARTICLE 16(1) OF THE DTAA AND ACCORDINGLY CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SOUGHT FOR PERMISSION FOR FILING OF ADDITIONAL SUPPORTING EVIDENCE BY STATING THAT THE FOREIGN ALLOWANCES WERE RECEIVED BY THE ASSESSEE OUTSIDE INDIA. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, WE ARE OF THE OPINION THAT THE ADDITIONAL EVIDENCE FILED BEFORE THE TRIBUNAL WERE NOT FILED BEFORE THE AUTHORITIES BELOW. T HUS, WE REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO VERIFY THE EVIDENCES FILED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. 7. THE NEXT GROUND RAISED BY THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING LOSS FROM HOUSE PROPERTY OF .147,187/ - . SINCE THE I.T.A. NO . 985 /M/ 15 8 GROUND IS NOT EMANATING OUT OF ASSESSMENT ORDER, THE GROUND RAISED BEFORE THE LD. CIT(A) WAS DISMISSED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, WE ARE OF THE OPINION THAT IF THE ASSESSEE HAS CLAIMED SUCH LOSS IN THE ORIGIN AL RETURN OF INCOME FILED BY THE ASSESSEE, THEN HE CAN PURSUE THE MATTER WITH THE ASSESSING OFFICER FOR ADJUDICATION. WE ALSO DIRECT THE ASSESSING OFFICER TO VERIFY AS TO WHETHER THE ASSESSEE HAS CLAIMED ANY SUCH LOSS AND ADJUDICATE THE SAME IN ACCORDANCE WITH LAW AFTER HEARING TO THE ASSESSEE . 8. SO FAR AS LEVY OF INTEREST UNDER SECTIONS 234B AND 234D OF THE ACT, THE SAME ARE CONSEQUENTIAL AND MANDATORY TO THE ASSESSED INCOME OF THE ASSESSEE. SINCE WE HAVE REMITTED THE ISSUE OF QUANTUM ADDITION TO DECIDE AFRESH, IT REQUIRES NO ADJUDICATION BY US. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. . ORDER PRONOUNCED ON THE 23 RD NOVEMBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVV URU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 23 . 1 1 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.