ITO (Int. Tax.)-I, Pune V. Ravindra Mahadeo Natu, Pune

ITA 2559/PUN/2012

• Counselvise Citation: 255924514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: NITIN W KHARE
• Keywords: Residential status; Rectification of order; Salary income
• Section: 143(3); 5(2); 6; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 2 559 /PN/20 12 ASSESSMENT YEAR : 200 8 - 09 INCOME TAX OFFICER (IT) - 1, PUNE V S. RAVINDRA MAHADEO NATU, A 1, MADHUKAMAL NAGAR, VAANAZ CORNER, PAUD ROAD, KOTHRUD, PUNE (APPELLANT) (RESPONDENT) PAN NO. AAEPN5174E APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: SHRI NITIN W. KHARE DATE OF HEARING : 15 - 01 - 2014 DATE OF PRO NOUNCEMENT : 29 - 01 - 2014 ORDER P ER R.S. PADVEKAR , JM : - IN THIS APPEAL , THE REVENUE HAS CHALLENG ED THE IMPUGNED ORDER OF THE LD. CIT(A) - IT/TP, PUNE DATED 1 3 - 09 - 2012 F OR THE A.Y. 200 8 - 09. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. WHETHE R LEARNED CIT(A) WAS CORRECT IN LAW AND IN FACTS IN HOLDING THAT ADVANCES RECEIVED IN FOREIGN CURRENCY ON BOARD FOR THE CONTRACTUAL EMPLOYMENT ENTERED IN INDIA BY INDIAN SHIPPING COMPANIES, WAS NOT TAXABLE IN THE CASE OF THE ASSESSEE, AN INDIAN CITIZEN? 2. W HETHER LEARNED CIT(A) WAS CORRECT IN HOLDING THAT THE SALARY ACCRUED AS WELL AS WAS RECEIVED OUTSIDE INDIA, AND THEREFORE WAS NOT TAXABLE IN INDIA? 3. WHETHER LEARNED CIT(A) WAS CORRECT IN HOLDING THAT THE SALARY WAS NOT TAXABLE IN INDIA, EVEN THOUGH THE SA ME WAS NOT TAXED BY ANY OTHER COUNTY? 2. THE BRIEFLY STATED FACTS ARE UNDER. IN THIS CASE THE ASSESSEE, AN INDIA CITIZEN, WAS IN CONTRACTUAL EMPLOYMENT OF TWO INDIAN SHIPPING 2 ITA NO. 2 559 /PN/2012, RAVINDRA MAHADEO NATU, PUNE COMPANIES AS CHIEF ENGINEER NAMELY GREAT OFFSHORE L TD. AND GREATSHIP (INDIA) LIM ITED. HE RECEIVED SALARY OF RS.19,63,771/ - AND RS.5,17,241/ - RESPECTIVELY FROM ABOVE MENTIONED COMPANIES IN F.Y. 2007 - 08 . THE RETURN OF INCOME FOR A . Y . 2008 - 09 WAS FILED ON 23.07.2007 IN THE STATUS OF NON - RESIDENT DECLARING A TOTAL INCOME OF RS.2,93,670/ - . IN THE RETURNED INCOME, INCOME FROM SALARY OF RS. 3,66,019/ - IS OFFERED AND SALARY OF RS.21,14,993/ - (RS.15,97,752/ - RECEIVED FROM GREAT OFFSHORE LTD . AND RS.5,17,241/ - RECEIVED FROM GREATSHIP (INDIA) LIMITED) WAS CLAIMED AS EXEMPT. 3. THE ASSESSING OFFI CER PASSED THE ASSESSMENT ORDER U/S. 143(3) ON 20.12.2010 AND INCOME WAS ASSESSED AT RS.35,45,290/ - WHICH WAS LATER RECTIFIED TO RS.24,14,665/ - BY PASSING AN ORDER U/S 154 ON 28.02.2011. THE ASSESSING OFFICER HELD THAT THE SALARY RECEIVED BY THE ASSESSEE F ROM THE INDIAN EMPLOYER IS TAXABLE IN INDIA AS PER SECTION 5(2) OF THE INCOME - TAX ACT, 1961. THE DISPUTE IS WITH REGARD TO SALARY INCOME OF RS.15,97,752/ - AND RS. 5,17,241/ - (TOTAL RS.21,14,993/ - ) CLAIMED TO BE EXEMPT AS EARNED OUT OF INDIA. 4. FROM THE DE TAILS FILED WITH THE RETURN, IT IS SEEN THAT THE ASSESSEE JOINED GREAT OFFSHORE LTD. ON 29 - 3 - 2007 AND SIGNED OFF ON 21 - 7 - 2007. HE AGAIN JOINED ON 5 - 10 - 2007 AND SIGNED OFF ON 11 - 12 - 2007. THE ASSESSEE JOINED GREATSHIP (INDIA) LIMITED ON 20 - 2 - 2008 AND SIGNED OFF ON 15 - 5 - 2008. AS PER FORM 16, THE TWO EMPLOYERS HAVE CERTIFIED THAT THE PERIOD ON VESSEL IN FOREIGN WATERS WAS 152 DAYS IN THE CASE OF FIRST COMPANY AND 42 DAYS IN CASE OF SECOND COMPANY DURING FINANCIAL YEAR 2007 - 08. THE ASSESSEE CLAIMED THAT AS HE W AS IN INDIA FOR LESS THAN 182 DAYS HE IS NON - RESIDENT AND HENCE SALARY EARNED FOR RENDERING EMPLOYMENT OUTSIDE INDIA IS EXEMPT AND NOT TAXABLE. 5. THE ASSESSING OFFICER HAS GONE ON THE FACT THAT THE EMPLOYER COMPANIES OF THE ASSESSEE I.E. GREAT OFFSHOR E LTD., MUMBAI AND 3 ITA NO. 2 559 /PN/2012, RAVINDRA MAHADEO NATU, PUNE GREATSHIP (INDIA) LTD., MUMBAI ARE INCORPORATED IN INDIA. IN THIS CASE , IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS NOT IN INDIA FOR THE PERIOD OF 194 DAYS. IT APPEARS THAT COMPANY HAS DEDUCTED THE TAX AT SOURCE OF HIS EMPLOYER COMPANIE S. THE ASSESSING OFFICER PLACED MORE EMPHASIS ON SEC. 5(2)(B) OF THE ACT AND CONCLUDED THAT THE ASSESSEE ENTIRE INCOME WAS TAXABLE IN INDIA AND DETERMINED TOTAL TAXABLE INCOME OF RS.35,45,290/ - . SUBSEQUENTLY PASSED THE RECTIFICATION ORDER U/S. 154 AND TO TAL INCOME WAS REDUCED TO RS.24,14,665/ - AS DOUBLE ADDITION WAS MADE TO THE EXTENT OF RS. 11,30,625/ - . THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) AND THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE ON REASON T HAT IN THE A.Y. 2008 - 09 HE WAS NON - RESI DENT WITH IN THE MEANING OF SEC. 6 (1) OF THE I.T. ACT AND HE HAS RECEIVED THE SALARY IN FOREIGN CURRENCY OUTSIDE INDIA. THE FINDING OF THE LD. CIT(A) IS AS UNDER: 3.1. I HAVE CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. I AM OF THE VIEW THAT APPELLANT DESERVES TO SUCCEED IN HIS APPEAL. THE BASIS OF MY DECISION IS AS UNDER: 3.2. THE FIRST ISSUE WHICH REQUIRES TO BE DECIDED FOR THE TAXABILITY OF THE INDIVIDUAL'S INCOME IN SUCH CASES IS HIS RESIDENTIAL STATUS. THE RESIDENTIAL STATUS OF AN INDIVIDUAL IS DETERMINED U/S 6(1) OF THE INCOME TAX ACT. THE AO HAS RELIED ON IRRELEVANT CONSIDERATIONS SUCH AS PAN, RESIDENTIAL HOUSE, NATIONALITY ETC. ACCORDING TO THE LAW, THESE FACTORS ARE NOT REQUIRED TO BE CONSIDERED FOR DETERMINING RE SIDENTIAL STATUS OF AN INDIVIDUAL. RESIDENTIAL STATUS OF AN INDIVIDUAL IS DETERMINED ACCORDING TO THE PROVISIONS OF SECTION 6(1) OF THE INCOME TAX ACT. ACCORDING TO WHICH THE INDIVIDUAL COULD BE CONSIDERED 'NON - RESIDENT' IF HE WAS OUT OF INDIA FOR MORE TH AN 182 DAYS IN A YEAR. THE DETAILS FURNISHED BY THE ASSESSEE SHOW THAT HE WAS OUTSIDE INDIA FOR MORE THAN 182 DAYS DURING THE YEAR. THEREFORE, I HOLD THAT HIS RESIDENTIAL STATUS DURING THE PREVIOUS YEAR IS NON - RESIDENT. 3.3. HAVING DECIDED THE STATU S OF THE APPELLANT, THE TAXABILITY OF THE INCOME RECEIVED BY HIM IS REQUIRED TO BE EXAMINED. SECTION 5(2) PROVIDES FOR TAXABILITY OF INCOME RECEIVED BY NON - RESIDENT. SECTION 5(2) IS RE - PRODUCED AS UNDER: 4 ITA NO. 2 559 /PN/2012, RAVINDRA MAHADEO NATU, PUNE SUBJECT TO THE PROVISIONS OF THIS ACT, THE TOTAL INC OME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A NON - RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED WHICH - (A) IS RECEIVED OR 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 ACCRU E OR ARISE TO HIM IN INDIA DURING SUCH YEAR. 3.4. THEREFORE, FIRST OF ALL, IT IS TO BE SEEN AS TO WHETHER THE APPELLANT RECEIVED SALARY INCOME IN INDIA OR NOT. THE EVIDENCE FURNISHED BY THE APPELLANT IN TERMS OF FORM 16 SHOW THAT THE AMOUNT WAS RECEIVED O UTSIDE INDIA. IN THESE CIRCUMSTANCES, APPELLANTS INCOME DOES NOT FALL WITHIN SECTION 5(2)(A). 3.5. THE AMOUNT ALSO IS NOT ACCRUED IN INDIA AS SALARY INCOME WOULD ACCRUE TO AN INDIVIDUAL AT THE PLACE WHERE SERVICES ARE RENDERED. THE APPELLANT HAD RENDERED SERVICES IN FOREIGN WATERS AND SALARY INCOME RELATABLE TO THAT PERIOD HAS BEEN CLAIMED AS EXEMPT AND INCOME RELATABLE TO SERVICES RENDERED IN INDIAN WATER HAS BEEN OFFERED TO TAX. THIS IS RIGHTLY DONE ACCORDING TO THE PROVISIONS OF LAW. IN VIEW OF THIS DI SCUSSION, MAJOR PART OF INCOME ALSO FALLS OUTSIDE THE SCOPE OF THE SECTION 5(2)(B). 3.6. TO SUMMARIZE, I HOLD THAT I) THE APPELLANT WAS 'NON - RESIDENT' DURING THE PREVIOUS YEAR. II) INCOME FROM SALARY WHICH WAS PERTAINING TO THE PERIOD DURING WHICH HE WA S IN FOREIGN WATERS WAS NOT RECEIVED IN INDIA. III) INCOME FROM SALARY HAS ACCRUED IN FOREIGN WATERS PERTAINING TO THE PERIOD DURING WHICH HE WAS IN FOREIGN WATERS IN OTHER WORDS, INCOME FROM SALARY ACCRUED AT THE PLACE OF RENDERING OF SERVICES, WHICH IS O UTSIDE INDIA. IV) IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE AO IS NOT SUSTAINED AND IS HEREBY DELETED. NOW THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE LD. DR DID NOT DISPUTE THAT THE ASSESSEE WAS N ON - RESIDENT IN THE A.Y. 2008 - 09. SO FAR AS THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE RECEIVED THE 5 ITA NO. 2 559 /PN/2012, RAVINDRA MAHADEO NATU, PUNE SALARY IN FOREIGN CURRENCY OUTSIDE INDIA NOTHING HAS BEEN PLACED BEFORE US BY THE REVENUE TO CONTROVERT THE SAID FINDING. IN OUR OPINION THE FISCAL J URISDICTION OF THE INDIA IS ON THE SOURCE AS WELL AS RESIDENT IAL STATUS OF A PERSON. IN THIS CASE AS PER SEC. 6(1 ) (A) IF A PERSON IS NOT IN INDIA FOR THE PERIOD LESS THAN 182 DAYS THEN HE IS NOT TREATED AS A RESIDENT. IN THE PRESENT CASE , THE ASSESSEE WA S OUTSIDE INDIA FOR A PERIOD OF 194 DAYS IN THE PREVIOUS YEAR 2007 - 08 RELEVANT TO THE A.Y. 2008 - 09 HENCE, THE ASSESSEE WAS NON - RESIDENT. SO FAR AS SEC. 5(2) IS CONCERNED THE INCOME OF THE NON - RESIDENT IS TAXABLE IN INDIA IF THE SOURCE OF INCOME IS IN INDI A OR IT ACCRUED OR RECEIVED IN INDIA. IN THE PRESENT CASE , THE ASSESSEE IS A NON - RESIDENT AND H IS EMPLOYMENT WAS OUTSIDE INDIA . H ENCE, SOURCE IS ATTACHED TO HIS EMPLOYMENT WHERE HE HAS RENDERED HIS LABOUR AND SERVICE . WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). ACCORDINGLY, SAME IS CONFIRM. 7 . IN RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 - 01 - 201 4 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 29 TH JANUARY, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - IT/TP, PUNE 4 THE CIT - IT/TP, PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY BY ORDER PRIVATE SECR ETARY INCOME TAX APPELLATE TRIBUNAL PUNE