Nymphia Koul, A-141, DLF City Phase -IV, Ridgewood Estate, Gurgaon, Haryana- 122002 V. ACIT- International Taxation, Gurgaon

ITA 1684/DEL/2023

AI Insights

The case involves Nymphia Koul, a non-resident individual, who appealed against the final assessment order for the assessment year 2020-21, which taxed her salary income of Rs.55,60,693/- received from M/s. Corning Technologies India Private Limited. The primary dispute was the taxability of this income in India, as the assessee claimed it was received for services rendered outside India and sought exemption under Article 16(1) of the India-USA Double Taxation Avoidance Agreement (DTAA). The Assessing Officer denied the treaty benefits due to the absence of a Tax Residency Certificate (TRC) and evidence that the services were rendered outside India. The Tribunal found merit in restoring the matter to the Assessing Officer to allow the assessee to present the TRC and other relevant evidence.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 116231 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-09-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 29-05-2023
• Laws Referred To: Income-tax Act, 1961, India-USA Double Taxation Avoidance Agreement (DTAA)
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Residential status; Salary income; Double taxation relief; Services rendered outside India; Benefit of exemption

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’, NEW DELHI BEFORE SHRI SAKTIJIT DEY, VICE-PRESIDENT AND DR. BRR KUMAR, ACCOUNTANT MEMBER ITA No. 1684/Del/2023 Assessment Year: 2020-21 Nymphia Koul, A-141, DLF City, Phase-IV, Ridgewood Estate, Gurgaon. PAN: ACEPK4509L Versus ACIT, International Taxation, Gurgaon. (Appellant) (Respondent) Assessee by : Ms. Priti Goel, Adv. Revenue by : Sh. Vizay B. Vasanta, CIT-DR Date of hearing : 20.09.2023 Date of pronouncement: 25.09.2023 ORDER Present appeal has been filed by the assessee, challenging the final assessment order dated 31.03.2023, passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 pertaining to assessment year 2020-21, in pursuance to the directions of learned Dispute Resolution Panel (DRP). 2. The solitary dispute arising in this appeal relates to taxability in India of an amount of Rs.55,60,693/- received as salary income. ITA No. 1684/Del/2023 2 3. Briefly, the facts are, the assessee is a non-resident individual. For the assessment year under dispute, the assessee filed her return of income on 24.12.2022 declaring income of Rs.9,83,425/-. As stated by the Assessing Officer, in the assessment year under consideration, the assessee has received salary income from M/s. Corning Technologies India Private Limited. In course of assessment proceedings, while verifying the return of income filed by the assessee, the Assessing Officer observed that the assessee claimed herself to be a tax resident of USA and claimed that the salary income of Rs.55,60,693/- was not received in course of exercising any service in India, but in USA towards services rendered outside India. Thus, the assessee claimed benefit of exemption under Article 16(1) of India-USA Double Taxation Avoidance Agreement (DTAA). 4. On scrutiny of record, the Assessing Officer observed that the assessee has not furnished any Tax Residency Certificate (TRC) in support of her claim that she is a tax resident of USA. Thus, he held that the benefit of India-USA DTAA would not be available to the assessee. Proceeding further, the Assessing Officer observed that no credible evidence was furnished by the assessee to establish on ITA No. 1684/Del/2023 3 record that the salary income in dispute was not received by her from services rendered in India. So, he concluded that the assessee is covered under section 5(2)(a) of the Act. Accordingly, he brought the salary income to tax in India while framing draft assessment order. Being aggrieved, the assessee raised objections before learned DRP. However, learned DRP upheld the decision of the Assessing Officer. 5. Before us, learned counsel for the assessee submitted that due to reasons beyond control of the assessee, the TRC could not be furnished before the departmental authorities. However, she submitted, as on date, the assessee is in possession of TRC and is ready to furnish it. Thus, she submitted, an opportunity may be granted to the assessee to furnish the TRC before the Assessing Officer and the Assessing Officer may be directed to consider assessee’s claim of treaty benefit in the light of the TRC. 6. Without prejudice, she submitted that the salary income in dispute has no connection with any services rendered in India, but was received for services rendered outside India. She submitted, the assessee, being tax resident of USA, the salary income has to be taxed in USA and not in India. ITA No. 1684/Del/2023 4 7. Learned Departmental Representative submitted, since the TRC was not furnished before the departmental authorities and now the assessee wants to furnish the TRC, the matter can be restored back to the Assessing Officer for examining assessee’s claim. 8. We have considered rival submissions and perused material on record. The short issue arising for consideration is whether salary income of Rs.55,60,693/- received by the assessee is taxable in India. At the assessment stage, the assessee has claimed that the salary income was not received by her towards any service exercised in India, but was received in USA. Hence, the salary income is not taxable in India in terms of Article 16(1) of India-USA DTAA. Apparently, the departmental authorities have declined to accept assessee’s residential status as a tax resident of USA in absence of valid TRC issued by the competent authority in USA. The observations of the Assessing Officer clearly reveal that purely because of non-submission of TRC, assessee’s claim of benefit under Article 16(1) of India-USA tax treaty was denied. In fact, while doing so, the Assessing Officer has categorically stated that the provisions of section 5(2)(a) of the Act are satisfied. A reading of ITA No. 1684/Del/2023 5 section 5(2)(a) of the Act clearly indicates that it applies to a non- resident and speaks of taxability of income received or deemed to be received in India during the relevant year by such person or on behalf of such person. Thus, firstly, the Assessing Officer has denied the treaty benefits to the assessee in absence of TRC and secondly, he also has disbelieved assessee’s contention that the salary income is not received or deemed to be received in India. 9. Keeping in perspective the aforesaid factual position, we find that the assessee has not brought on record before the departmental authorities necessary and relevant material such as TRC, evidences regarding earning of salary income outside India and evidence regarding stay outside India during the entire year etc. In our view, aforesaid evidences are vital for deciding the claim of the assessee. Since, learned counsel for the assessee has submitted before us that as on date she is in possession of TRC issued by the competent authority, we are inclined to restore the issue to the Assessing Officer for de novo adjudication so as to enable the assessee to furnish TRC and any other credible evidence to establish her claim of treaty benefit and also that the salary income did not arise or deemed to ITA No. 1684/Del/2023 6 have arisen in India in terms of section 5(2)(a) of the Act. The Assessing Officer is directed to consider the evidences in proper perspective and decide the issue accordingly after providing reasonable and due opportunity of being heard to the assessee. Grounds are allowed for statistical purposes. 10. In the result, appeal is allowed for statistical purposes. Order pronounced in the open court on 25/09/2023. Sd/- Sd/- (DR. BRR KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE-PRESIDENT Dated: 25.09.2023 *aks/-