ITO, New Delhi V. Mr. Arjun Bhowmik, West Bengal

ITA 3484/DEL/2012

• Counselvise Citation: 348420114 RSA 2012
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIRTHI LAL
• Assessee Lawyers: SK CHAUDHARY
• Keywords: Salary income; Double taxation relief
• Section: 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: A NEW DELHI BEFORE SHRI AD JAIN, JM AND SHRI J.SUDHAKAR REDDY, A.M. ITA NO: 3484/DEL/2012 ASSESSMENT YEAR : - 2008-09 ITO, WARD 43(4) VS. MR.ARJUN BHOWMIK NEW DELHI C/O DR.ASIT BHOWMIK PRAFFULLANAGAR, HABRA 24, PARGANAS, W.B. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PIRTHI LAL, SR.D.R. RESPONDENT BY : SHRI SK CHAUDHARY, C.A. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DT. 19.4.2012 OF LD.CIT(A)-XXX, NEW DELHI FOR ASSESSMEN T YEAR 2008-09. . 2. THE FACTS OF THE CASE:- THE ASSESSEE IS AN EMPL OYEE OF M/S KJS INDIA PVT.LTD. DURING THE YEAR THE ASSESSEE WAS ON A LONG TERM INTERNATIONAL ASSIGNMENT TO KRAFT FOODS, PHILIPPINE S, W.E.F. 1 ST DECEMBER,2006. THE ASSESSEE WAS SECONDED TO KRAFT FOODS, PHILIPPINES AND WAS RENDERING SERVICES AS AN EMPLOYEE OF KRAFT FOODS, PHILIPPINES. THE ASSESSEE WAS PRESENT IN INDIA FOR LESS THAN 60 DAYS. IN FACT THE AO RECORDS THAT FOR FY 2007-08 THE ASSESSEE WAS IN IND IA ONLY FOR 17 DAYS. THE ASSESSEE WAS REGARDED AS A TAX RESIDENT OF PHIL IPPINES FOR THE FY 1 ST APRIL,2007 TO 31 ST MARCH, 2008. HE WAS PAYING TAXES IN PHILIPPINES O N THE SALARY RECEIVED IN INDIA, ON RENDERING OF SERV ICES IN PHILIPPINES. 2 3. FOR THE A.Y. 2008-09 THE ASSESSEE FILED RETURN OF INCOME IN INDIA U/S 139(4) OF THE ACT ON 25 TH SEPTEMBER,2008, DECLARING NIL INCOME AND CLAIMING REFUND OF RS.13,35,700/-. THE AO WAS OF T HE VIEW THAT AS PER S.5(2) READ WITH S.6 OF THE ACT, THE TOTAL INCOME O F ANY PREVIOUS YEAR OF A PERSON WHO IS A NON-RESIDENT, INCLUDES ALL INCOMES FROM WHATEVER SOURCE DERIVED, WHICH IS RECEIVED OR IS DUE TO BE R ECEIVED IN INDIA IN SUCH YEAR, AND HENCE CHARGEABLE TO TAX TO INDIAN INCOME TAX. HE HELD THAT THE SALARY IS ACCRUED, RECEIVED AND PAID IN INDIA . 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY RELIED ON ARTICLE 6(1) OF INDIA- PHILIPPINES DOUBLE TAXATION AVOIDANCE AGREEMENT AND CAME TO A CONCLUSION THAT THE SALARY IN QUESTION IS NOT TAXAB LE IN INDIA. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFI CER TO ALLOW THE ASSESSEES CLAIM OF HIS SALARY OF RS.40,83,230/- AS EXEMPT UNDER ARTICLE 16(1) OF THE INDO-PHILIPPINES DOUBLE TAXATION AVOID ANCE AGREEMENT WHILE IGNORING THE FACT THAT THE SALARY WAS ACCRUED, RECE IVED AND PAID IN INDIA AND WAS TAXED ACCORDINGLY AS PER S.5(2) R.W.S.6 OF THE INCOME TAX ACT, 1961. 2. . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFI CER TO ALLOW THE ASSESSEES CLAIM OF HIS SALARY OF RS.40,83,230/- AS EXEMPT UNDER ARTICLE 16(1) OF THE INDO-PHILIPPINES DOUBLE TAXATION AVOID ANCE AGREEMENT WITHOUT ASCERTAINING AS TO WHETHER THE TAX PAID BY THE ASSESSEE IN PHILIPPINES INCLUDED THE SALARY ACCRUED, RECEIVED AND PAID IN INDIA AS NO RELIEF WAS CLAIMED UNDER SECTION 90 OF THE INCOME T AX ACT, 1961. 3 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFI CER TO WITHDRAW THE PENALTY PROCEEDINGS INITIATED BY THE ASSESSING OFFI CER UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 AS THE SAME IS PREMATURE. 6. WE HAVE HEARD MR.PIRTHI LAL, SR.D.R. ON BEHALF O F THE REVENUE AND MR.SK CHAUDHARY, THE LD.COUNSEL FOR THE ASSESSEE. 7. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRC UMSTANCES OF THE CASE AND MATERIAL PLACED ON RECORD, WE HOLD AS FOLL OWS:- THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS NOT REN DERED SERVICES IN INDIA. IN FACT HE WAS IN INDIA ONLY FOR 17 DAYS. THE ASSE SSEE HAS PAID TAXES ON THE SAID SALARY IN PHILIPPINES AND THE INCOME TAX R ETURNS HAVE BEEN FILED IN PHILIPPINES. 8. ARTICLE 16(1) OF THE INDO-PHILIPPINES DTAA READS AS FOLLOWS:- ARTICLE 16: DEPENDENT PERSONAL SERVICES 1. SUBJE CT TO THE PROVISIONS OF ARTICLES 17 (DIRECTORS FEES), 18. ( ENTERTAINERS AND ATHLETES), 19 (GOVERNMENT SERVICE), 20. (NON-GO VT. PENSIONS AND ANNUITIES), 21. (STUDENTS AND TRAINEES ) AND 22. (PROFESSORS AND TEACHERS), SALARIES, WAGES AND OTHE R SIMILAR REMUNERATION DERIVED BY A RESIDENT OF A CONTRACTING STATE IN RESPECT OF AN EMPLOYMENT SHALL BE TAXABLE ONLY IN T HAT STATE UNLESS THE EMPLOYMENT IS EXERCISED IN ;THE OTHER CO NTRACTING STATE. IF THE EMPLOYMENT IS SO EXERCISED, SUCH REM UNERATION AS IS DERIVED THEREFROM MAY BE TAXED IN THAT OTHER STATE. 9. AS PER THE ABOVE ARTICLE, THE SALARY INCOME DERI VED BY THE APPELLANT, WHO IS A TAX RESIDENT OF PHILIPPINES, FR OM EXERCISING EMPLOYMENT IN PHILIPPINES SHALL BE TAXABLE ONLY IN PHILIPPINES. 4 THEREFORE, SALARY RECEIVED BY HIM THROUGH KJS INDIA FOR THE EMPLOYMENT EXERCISED IN PHILIPPINES IS NOT TAXABLE IN INDIA. APPLYING THIS ARTICLE, WE UPHOLD THE FINDING OF THE FIRST APPELLATE AUTHORITY AND DISMISS THIS APPEAL OF THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2012. SD/- SD/- (AD JAIN) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 21 ST SEPTEMBER, 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 11/09/2012 2. DRAFT PLACED BEFORE THE AUTHOR ON: 18/08/2012 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON : 5. APPROVED DRAFT CAME TO SR.P.S. ON: 21/09/2012 6. DATE OF PRONOUNCEMENT : 21/09/2012 7. FILE SENT TO BENCH CLERK ON : 21/09/2012 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :