Ayyannan Chakkaravarthy, CHENNAI V. ITO International Taxation 1(1), CHENNAI

ITA 2409/CHNY/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4977 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 03-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Residential status; Salary income; Services rendered outside India

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH: CHENNAI . , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER ./ ITA NO.2409/CHNY/2017 /ASSESSMENT YEAR: 2014-15 SHRI AYYANNAN CHAKKARAVARTHY, NO.170, RAM NAGAR, COLLECTOR NAGAR, ANNA NAGAR, CHENNAI-600 101. VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION-1(1), CHENNAI. [PAN: AAUPC 3215 H ] ( $ /APPELLANT) ( %&$ /RESPONDENT) $ ' / APPELLANT BY : MR.S.SRIDHAR, ADV. %&$ ' /RESPONDENT BY : MR.B.SAGADEVAN, JCIT ' /DATE OF HEARING : 01.08.2018 ' /DATE OF PRONOUNCEMENT : 02.08.2018 / O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE WHICH IS DIRE CTED AGAINST AN ORDER DATED 11.07.2017 OF COMMISSIONER OF INCOME TA X (A)-16, CHENNAI, IT HAS ALTOGETHER TAKEN NINE GROUNDS, OF WHICH, GRO UNDS 1, 8 & 9 ARE GENERAL IN NATURE NEEDING NO ADJUDICATION. 2. THROUGH ITS GROUND NOS.2 TO 5, ASSESSEE IS AGGRI EVED ON AN ADDITION OF RS.30,00,457/- BEING THE SALARY INCOME RECEIVED BY HIM, WHILE HE WAS A NON-RESIDENT SEA-FARER DURING THE PREVIOUS YEAR R ELEVANT TO THE IMPUGNED ASSESSMENT YEAR. ITA NO.2409/CHNY/2017 :- 2 -: 3. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSES SEE HAD CLAIMED SALARY OF RS.30,00,457/- CREDITED TO HIS NON-RESIDE NT ORINDARY (IN SHORT NRO) ACCOUNT IN INDIA AS EXEMPT FROM TAX. AS PER THE LD.AR, ASSESSEE WAS EMPLOYED WITH ONE M/S.GLOBAL UNITED SHIPPING PV T. LTD., AND WAS SERVING AS MARINE ENGINEER IN A SHIP CALLED MV JAL VAHINI IN INTERNATIONAL WATERS. FURTHER, AS PER THE LD.AR, ASSESSEE WAS OUT SIDE INDIA FOR 243 DAYS AND THEREFORE, WAS A NON-RESIDENT DURING THE P REVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR. ACCORDING TO THE LD.AR, THE SALARY CREDITED TO THE NRO A/C WAS FOR SERVICES RENDERED O UTSIDE INDIA, AND ASSESSEE HAD CLAIMED EXEMPTION FOR SUCH SALARY. HO WEVER, AS PER THE LD.AR, LD.ASSESSING OFFICER RELYING ON SEC.5 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) HAD HELD THAT INCOME ONCE RECE IVED IN INDIA, BECAME TAXABLE IN INDIA IRRESPECTIVE OF THE SOURCE FROM WH ICH IT WAS DERIVED AND THE RESIDENTIAL STATUS OF THE ASSESSEE. AS PER THE LD.AR, LD.AO TOOK A VIEW THAT THE SALARY HAVING BEEN CREDITED BY THE E MPLOYER DIRECTLY INTO ASSESSEES BANK ACCOUNT, IT CAME TO THE ASSESSEE IN INDIA AND HENCE IT WAS TAXABLE IN INDIA. ACCORDING TO THE LD.AR, THE LD.AO HAD RELIED ON A DECISION OF KOLKATTA BENCH IN THE CASE OF SHRI TAPA S KUMAR BANDOPADHYAY VS. DCIT (2016) 159 ITD 309. SUBMISSION OF THE LD. AR WAS THAT THE LD.CIT(A) CONFIRMED THE ADDITION WITHOUT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT HE WAS EMPLOYED THROUGH AN AGENT COMP ANY AND SUCH AGENT COMPANY WAS ACTING AS A SERVICE PROVIDER FOR A SHIPPING COMPANY IN WHICH ASSESSEE WAS CARRYING OUT HIS OFFICIAL DUT IES. ITA NO.2409/CHNY/2017 :- 3 -: 4. CONTINUING HIS SUBMISSIONS, LD.AR SUBMITTED THAT SUBSEQUENT TO THE DECISION OF THE KOLKATTA BENCH IN THE CASE OF SHRI TAPAS KUMAR BANDOPADHYAY (SUPRA), THE CENTRAL BOARD OF DIRECT T AXES HAD COME OUT WITH A CIRCULAR DATED 11.04.2017, WHEREIN, IT WAS C LARIFIED THAT SALARY RECEIVED BY A SEA-FARER IN AN NRI A/C MAINTAINED IN INDIA, WOULD NOT BE TAXABLE IN INDIA. THUS, AS PER THE LD.AR, ASSESSEE SHOULD BE GIVEN THE BENEFIT OF THE ABOVE CBDT CIRCULAR. 5. PER CONTRA, LD.DR SUPPORTING THE ORDERS OF THE A UTHORITIES BELOW SUBMITTED THAT THE DECISION OF THE KOLKATTA BENCH I N THE CASE OF SHRI TAPAS KUMAR BANDOPADHYAY (SUPRA), WAS ON VERY SIMILAR FAC TS. ACCORDING TO HIM, LOWER AUTHORITIES WERE, THEREFORE, JUSTIFIED I N MAKING THE ADDITION FOR THE SALARY. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL PLACED ON RECORD CAREFULLY. IT IS NOT DISPUTED THAT ASSESSEE WAS A NON- RESIDENT DURING THE PREVIOUS YEAR RELEVANT TO THE I MPUGNED ASSESSMENT YEAR. IT IS ALSO NOT DISPUTED THAT SALARY WAS CRED ITED BY THE EMPLOYER OF THE ASSESSEE TO HIS NRO A/C IN INDIA. THIS SALARY WAS RECEIVED BY THE ASSESSEE FOR SERVICES RENDERED BY HIM IN A SHIP WHI CH WAS IN INTERNATIONAL WATERS, AND ASSESSEE WAS OUTSIDE INDIA FOR MORE THA N 243 DAYS. NO DOUBT, THE KOLKATTA BENCH OF THIS TRIBUNAL IN THE C ASE OF SHRI TAPAS KUMAR BANDOPADHYAY (SUPRA), HAD HELD THAT AN ASSESSEE COU LD NOT CLAIM ANY EXEMPTION FOR SALARY RECEIVED IN INDIA EVEN IF HIS STATUS WAS THAT OF A NON- ITA NO.2409/CHNY/2017 :- 4 -: RESIDENT INDIAN, WORKING AS A SEA-FARER IN INTERNAT IONAL WATERS. HOWEVER, SUBSEQUENT TO THE ABOVE DECISION WHICH WAS PRONOUNC ED ON 01.06.2016, THE CBDT HAD COME OUT WITH CIRCULAR NO.13/2017 ON 1 1.04.2017, WHICH READ AS UNDER: SUBJECT: CLARIFICATION REGARDING LIABILITY TO INCOM E-TAX IN INDIA FOR A NON-RESIDENT SEAFARER RECEIVING REMUNERATION IN NRE (NON RESIDEN T EXTERNAL) ACCOUNT MAINTAINED WITH AN INDIAN BANK. REPRESENTATIONS HAVE BEEN RECEIVED IN THE BOARD THA T INCOME BY WAY OF SALARY, RECEIVED BY NON-RESIDENT SEAFARERS, FOR SERVICES RE NDERED OUTSIDE INDIA ON-BOARD FOREIGN SHIPS, ARE BEING SUBJECTED TO TAX IN INDIA FOR THE REASON THAT THE SALARY HAS BEEN RECEIVED BY THE SEAFARER INTO THE NRE BANK ACC OUNT MAINTAINED IN INDIA BY THE SEAFARER. 2. THE MATTER HAS BEEN EXAMINED IN THE BOARD. SECTI ON 5(2)(A) OF THE INCOME-TAX ACT PROVIDES THAT ONLY SUCH INCOME OF A NON-RESIDEN T SHALL BE SUBJECTED TO TAX IN INDIA THAT IS EITHER RECEIVED OR IS DEEMED TO BE RE CEIVED IN INDIA. IT IS HEREBY CLARIFIED THAT SALARY ACCRUED TO A NON-RESIDENT SEA FARER FOR SERVICES RENDERED OUTSIDE INDIA ON A FOREIGN SHIP SHALL NOT BE INCLUD ED IN THE TOTAL INCOME MERELY BECAUSE THE SAID SALARY HAS BEEN CREDITED IN THE NR E ACCOUNT MAINTAINED WITH AN INDIAN BANK BY THE SEAFARER. NO DOUBT, ASSESSEE BEFORE US HAD RECEIVED HIS SALA RY THROUGH AN NRO ACCOUNT WITH A BANK IN INDIA AND NOT THROUGH AN NRI A/C. HOWEVER, IN MY OPINION THERE COULD BE NO MUCH DIFFERENTIATIO N BETWEEN AN NRI A/C AND NRO A/C, IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. ASSESSEE IN MY OPINION WAS ELIGIBLE TO CLAIM THE BENEFIT OF THE CI RCULAR REPRODUCED ABOVE. THERE IS NO CASE FOR THE REVENUE THAT ASSESSEE WAS NOT ON BOARD OF A FOREIGN SHIP. IN SUCH CIRCUMSTANCES, IN MY OPINION ASSESSEE OUGHT NOT HAVE BEEN TAXED FOR THE SUM OF RS.30,00,457/- RECEI VED FOR HIS SERVICES AS A NON-RESIDENT SEA-FARER. THE ADDITION STANDS D ELETED. GROUNDS 2 TO 5 ARE ALLOWED. ITA NO.2409/CHNY/2017 :- 5 -: 7. VIDE ITS GROUNDS 6 & 7, ASSESSEE IS AGGRIEVED ON AN ADDITION OF RS.7,90,000/-, CONSIDERED BY LD.AO AS UNEXPLAINED C ASH CREDIT. 8. THE LD.AR DID NOT ADVANCE ANY ARGUMENTS ON THESE GROUNDS RAISED BY THE ASSESSEE. HENCE, THESE GROUNDS ARE DISMISSE D AS NOT ARGUED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 2 ND DAY OF AUGUST, 2018, IN CHENNAI. SD/- ( . ) ( ABRAHAM P.GEORGE ) /ACCOUNTANT MEMBER /CHENNAI, . /DATED: AUGUST 02, 2018. TLN ' %/0 10 /COPY TO: 1. $ /APPELLANT 4. 2 /CIT 2. %&$ /RESPONDENT 5. 0 % /DR 3. 2 ( ) /CIT(A) 6. /GF