Shri Shyamal Gopal Chattopadhyay, Kolkata V. DCIT, International Taxation, 2(1), Kolkata

ITA 395/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1735 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N B SOM
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Residential status; Salary income; Double taxation relief; Services rendered outside India; Permanent establishment
• Section: 143(3); 6; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH KOLKATA BEFORE SHRI A. T. VARKEY, JM & DR. A.L.SAINI, AM ./ ITA NO.395/KOL/2017 ( / ASSESSMENT YEAR : 2013-2014) SHRI SHYAMAL GOPAL CHATTAPADHYAY FLAT NO.-6, BLOCK-FE-3, SALT LAKE, SECTOR-III, KOLKATA- 700106 VS. DCIT (INTERNATIONAL TAXATION)2(1),AAYAKARBHAVANP OORVA, 110 SHANTIPALLY, KOLKATA- 700107 ./ ./PAN/GIR NO. : ACWPC 3735 A ( /ASSESSEE ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI MANOJ KATARUKA, AR /REVENUE BY : SHRI N.B. SOM, JCIT / DATE OF HEARING : 19/06/2017 /DATE OF PRONOUNCEMENT 09/08/2017 / O R D E R PER DR.ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2013-14, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-22, KOLKATA, IN APPEAL NO.22/CIT(A)-22/13-14/16-17/KOL, DATED 23.12.2016, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 30.01.2016. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 08.07.2014 DECLARING TOTAL INCOME AT RS.62,419/-. ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S 143(3) OF THE ACT AND THE AO HAS COMPLETED THE ASSESSMENT BY MAKING ADDITION OF RS. 34,93,585/- ON ACCOUNT OF SALARY RECEIVED IN FOREIGN ITA NO.395/17 SHYAMAL GOPAL CHATTOPADHYAY 2 CURRENCY AND DEPOSITED IN ASSESSEE`S NRE ACCOUNT. THE AO OBSERVED THAT THE INCOME OF THE ASSESSEE FOR THE FINANCIAL YEAR 2012-13 RELEVANT TO ASSESSMENT YEAR 2013-14 RECEIVED FROM HIS FOREIGN EMPLOYER IN FOREIGN CURRENCY AND DEPOSITED IN HIS NRE ACCOUNT MAINTAINED IN A BRANCH LOCATED IN INDIA AND THE SAME IS CHARGEABLE TO TAX U/S 5(2)(A) READ WITH SECTION 28 OF THE I.T. ACT AND THIS WAY, THE AO MADE THE ADDITION OF RS.34,93,585. THE ASSESSEE, DURING THE ASSESSMENT PROCEEDINGS SUBMITTED BEFORE THE AO THAT HE WAS NON-RESIDENT IN INDIA DURING THE ASSESSMENT YEAR UNDER CONSIDERATION AND HIS SALARY WAS DEPOSITED BY THE FOREIGN EMPLOYER IN FOREIGN CURRENCY IN HIS NRE ACCOUNT, THEREFORE HE IS NOT LIABLE TO PAY TAX IN INDIA. ASSESSEE ALSO SUBMITTED BEFORE THE AO THAT HE DID NOT GET THE SALARY IN INDIAN INR, IN INDIA, THEREFORE HIS SALARY SHOULD NOT BE TREATED AS RECEIVED IN INDIA OR ACCRUED IN INDIA. HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND MADE ADDITION OF RS. 34,93,585/- 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE LD. CIT(A) TO UPHOLD THE ADDITION MADE BY THE AO OF RS. 34,93,585/- AS INCOME U/S 5(2)(A) OF THE INCOME TAX ACT IS ERRONEOUS AND CONTRARY TO THE MATERIAL FACTS ON RECORD. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE LD. CIT(A) TO UPHOLD THE ACTION OF THE AO TO BRING INTO TAX AN AMOUNT OF RS. 33,47,112/- BY TREATING IT BE RECEIVED IN INDIA IS BASED ON INCORRECT ASSUMPTION OF FACTS AND WRONG APPLICATION OF LAW. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE AO NOT TO FOLLOW THE DECISION OF THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF UTANKA ROY VS. DIT(INTL TAX) KOLKATA & OTHERS IN W.P. NO. 369 OF 2014 AND INSTEAD TREAT AS INCOME OF RS. 34,93,585/- U/S 5(2)(A) OF THE INCOME TAX IS BASED ON INCORRECT APPLICATION OF LAW AND THE ADDITION IS ARBITRARY AND EXCESSIVE. 4. THAT THE ORDER OF THE LD. CIT(A) UPHOLDING THE ORDER OF THE AO IS ARBITRARY, EXCESSIVE AND UNJUSTIFIED AND BAD IN LAW. 4. ALTHOUGH, IN THIS APPEAL THE ASSESSEE HAS RAISED THE MULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING THE MAIN GRIEVANCE OF THE ASSESSEE HAS BEEN CONFINED TO THE ISSUE WHETHER THE ITA NO.395/17 SHYAMAL GOPAL CHATTOPADHYAY 3 REMUNERATION RECEIVED BY THE ASSESSEE IN THE SUM OF RS.34,93,585/- WHICH WAS DIRECTLY REMITTED FROM FOREIGN TO THE NRE ACCOUNT OF ASSESSEE BY THE FOREIGN COMPANY COULD BE BROUGHT TO TAX IN IN INDIA BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE . 4.1 THE BASIC FACTS QUA THE ISSUE ARE THAT THE ASSESSEE IS A MARINE ENGINEER AND WAS ENGAGED WITH M/S WALLEM SHIP MANAGEMENT LTD., HONGKONG IN THE CAPACITY AS MASTER. THE ASSESSEE WAS PAID US $ 65000 ON DIFFERENT DATES CONVERTIBLE IN INDIAN RUPEES RS.34,93,585/- WHICH WAS REMITTED AS PER HIS REQUEST IN HSBC BANK A/C (NRE) BEING A/C NO.023131683006. HE WAS A NON-RESIDENT INDIVIDUAL FOR THE AY UNDER APPEAL I.E. 2013-14. THE ASSESSEE STATED THAT THE ABOVE INCOME WAS RECEIVED FROM OUTSIDE INDIA IN FOREIGN CURRENCY AND, THEREFORE, CLAIMED AS EXEMPT. THE ASSESSEE STATED THAT HE USED TO GET HIS CONTRACT TO DO SERVICE WITH INDIAN / FOREIGN SHIPPING COMPANY THROUGH INDIAN AGENT AND THAT CONTRACT WERE EXECUTED IN INDIA DULY SIGNED BY THE AGENT IN INDIA AND HIMSELF BEFORE JOINING THE SHIP. BUT HE HAS TO FLOAT ON FOREIGN WATER TO RENDER SERVICES DURING THE COURSE OF VOYAGE AND ACCORDINGLY WHEN HE WILL STAY MORE THAN 182 DAYS OUTSIDE INDIA OR ON FOREIGN WATER, HIS RESIDENTIAL STATUS WILL BE TREATED AS 'NON-RESIDENT' AS PER PROVISION OF LAW AND HIS SALARY INCOME WHICH ARE RECEIVED OUTSIDE INDIA IN FOREIGN CURRENCY ALSO WILL NOT BE TAXABLE U/S 5 OF THE ACT. THE LD. AO ACCEPTED THE RESIDENTIAL STATUS OF THE ASSESSEE AS NON-RESIDENT AFTER VERIFICATION OF COPY OF PASSPORT AND OTHER DETAILS SUBMITTED. THE ASSESSEE CLAIMED THAT AS PER PROVISION OF LAW, SALARY INCOME, WHICH IS RECEIVED OUTSIDE INDIA IN FOREIGN CURRENCY WILL NOT BE TAXABLE U/S. 5 OF THE ACT. THE LD. AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE REMUNERATION RECEIVED IN INDIA SHOULD NOT BE BROUGHT TO TAX IN TERMS OF SECTION 5(2)(A) OF THE ACT. 4.2 . THE ASSESSEE REPLIED TO THE SHOW CAUSE NOTICE STATING THAT THE PAYMENTS HAVE BEEN MADE TO THE ASSESSEE AS REMUNERATION BY FOREIGN EMPLOYER AND THE ENTIRE CONSIDERATION WAS RECEIVED IN USD OUTSIDE INDIA AND ON REQUEST OF THE ASSESSEE, IT WAS REMITTED TO THE SAVINGS BANK NRE ACCOUNT IN INDIA FROM TIME TO TIME. IT WAS ALSO PLEADED BY THE ASSESSEE THAT THE ENTIRE AMOUNT OF INCOME IN USD WERE RECEIVED BY HIM FROM OUTSIDE INDIA AND THAT INCOME IN USD SHALL NOT BE DEEMED ITA NO.395/17 SHYAMAL GOPAL CHATTOPADHYAY 4 TO BE RECEIVED IN INDIA AND IT WAS ALSO SUBMITTED THAT OTHER THAN FOREIGN CURRENCY, ANY AMOUNT COULD NOT BE DEPOSITED IN NRE A/C. IT WAS STATED THAT THE AMOUNTS WHICH WERE CREDITED IN HIS NRE A/CS IN INDIA WERE RECEIVED OUTSIDE AND BEING 'NON RESIDENT' THOSE INCOME WERE NOT TAXABLE U/S 5 OF THE ACT. THE LD. AO EXAMINED THE REPLY OF THE ASSESSEE TOGETHER WITH THE BANK STATEMENTS OF THE ASSESSEE AND OBSERVED THAT THE PROVISIONS OF SECTION 5(2)(A) OF THE ACT STATES THAT INCOME FROM WHATEVER SOURCE DERIVED WHICH IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA IN SUCH YEAR BY OR ON BEHALF OF SUCH PERSON SHALL BE INCLUDED IN THE TOTAL INCOME OF ANY PREVIOUS YEAR OF SUCH PERSON. THE LD AO FURTHER OBSERVED THAT THE SAID SECTION DOES NOT MENTION ANYTHING ABOUT INDIAN CURRENCY OR FOREIGN CURRENCY. THE SECTION SPECIFICALLY STATED THAT ANY INCOME RECEIVED OR DEEMED TO BE RECEIVED IN INDIA IS TAXABLE IN INDIA. THE ONLY EXCEPTION TO THIS TAXABILITY IS DUE TO THE OPERATION OF DOUBLE TAXATION AVOIDANCE AGREEMENTS (DTAA). IN THE ASSESSEE'S CASE, THE ASSESSEE WAS NOT A RESIDENT OF ANY OTHER STATE AS ALREADY STATED BY HIM, THEREFORE, NO DTAA IS APPLICABLE ON HIS INCOME. 4.3.AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE ARGUED BEFORE THE CIT (A) THAT HE WAS A NON-RESIDENT AND NO INCOME WAS TAXABLE IN INDIA AS ENTIRE SERVICE WAS RENDERED OUTSIDE INDIA. IT WAS ARGUED THAT ASSESSEE WAS UNDER EMPLOYMENT OF A FOREIGN COMPANY AND SERVICES WERE RENDERED OUTSIDE INDIA AND SHIPPING COMPANY DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. FOR THE SERVICES RENDERED BY THE ASSESSEE OUTSIDE INDIA THE ENTIRE PAYMENT OF SALARY WAS MADE BY THE FOREIGN COMPANY IN US$ AND REMITTANCE WAS MADE TO THE NRE ACCOUNT OF THE ASSESSEE IN INDIA. THE ASSESSEE CLAIMED THAT THE MEANING OF THE WORD 'RECEIVED IN INDIA' WITHIN THE MEANING OF SECTION 5(2)(A) OF THE ACT SHOULD BE INTERPRETED ONLY IN THE CONTEXT OF INCOME RECEIVED IN INDIAN CURRENCY IN INDIA. THERE IS A DISTINCTION BETWEEN RECEIVING MONEY AND TRANSFER OF MONEY. THE DISTINCTION IS THAT WHERE A FOREIGN COMPANY MAKES PAYMENT TO THE NON-RESIDENT FOR SERVICES RENDERED OUTSIDE INDIA, THE FOREIGN COMPANY IS TRANSFERRING THE MONEY OR REMITTING THE MONEY IN FOREIGN CURRENCY TO THE ASSESSEE WHO IS A NON- RESIDENT, AND THE MONEY IS BEING RECEIVED BY THE ASSESSEE NOT IN INDIA AS BECAUSE THE POINT OF PAYMENT BY THE FOREIGN COMPANY IS IN FOREIGN LAND AND THE POINT OF ITA NO.395/17 SHYAMAL GOPAL CHATTOPADHYAY 5 RECEIPT BY THE ASSESSEE SHOULD BE TAKEN FROM THE POINT OF PAYMENT. MERE REMITTANCE OR TRANSFER OF THE PAYMENTS BY THE FOREIGN COMPANY IN THE NRE ACCOUNT OF THE ASSESSEE IN INDIA THAT ALSO IN FOREIGN EXCHANGE SHALL NOT BE CONSIDERED AS INCOME RECEIVED IN INDIA AND ANY LARGER INTERPRETATION TO THE SECTION WOULD RENDER IT OTIOSE. HOWEVER, THE LD CIT(A) REFERRED JUDGEMENTS OF VARIOUS HIGH COURTS/ TRIBUNALS AND CAME ON THE CONCLUSION THAT MATTER WAS COVERED AGAINST THE ASSESSEE BY THE DECISIONS OF THE HON`BLE ITAT, AND THEREFORE HE CONFIRMED THE ADDITION MADE BY AO. 4.4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ENTIRE ISSUE UNDER CONSIDERATION IS FULLY COVERED BY THE JUDGMENT OF HONBLE I.T.A.T., KOLKATA, IN I.T.A NO. 67/KOL/2016 FOR ASSESSMENT YEAR 2011-12 DATED 02.06.2017 WHEREIN IT HAS BEEN HELD AS FOLLOWS: 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE DECISION RELIED UPON BY THE ID DR , WHICH WAS AUTHORED BY THE UNDERSIGNED , WAS RENDERED BY PLACING RELIANCE ON THE THIRD MEMBER DECISION OF MUMBAI TRIBUNAL IN THE CASE OF CAPT. A.L.FEMANDES VS. ITO REPORTED IN (2002) 81 ITD 203 (MUM ) (TM ) . THIS DECISION CLEARLY LAYS DOWN THAT THE RECEIPT IN INDIA OF SALARY FOR SERVICES RENDERED ON BOARD A SHIP OUTSIDE THE TERRITORIAL WATERS OF ANY COUNTRY WOULD BE SUFFICIENT TO GIVE THE COUNTRY WHERE IT IS RECEIVED THE RIGHT TO TAX THE SAID INCOME ON RECEIPT BASIS. SUCH A PROVISION IS FOUND IN SECTION 5(2)(A) OF THE ACT WHICH WAS APPLIED IN THE AFORESAID DECISION. IT IS TRITE THAT DECISION OF A THIRD MEMBER WOULD BE EQUIVALENT TO A DECISION OF A SPECIAL BENCH AND THEREBY WOULD BECOME A BINDING PRECEDENT ON THE DIVISION BENCH. HOWEVER, WE FIND THAT THE IMPUGNED ISSUE HAS BEEN DULY ADDRESSED BY THE CBDT CIRCULAR NO. 13/2017 DATED 11.4.2017 AS RIGHTLY RELIED UPON BY THE ID AR. FOR THE SAKE OF CONVENIENCE, THE SAID CIRCULAR IS REPRODUCED HEREUNDER:- SECTION 5 OF THE INCOME-TAX ACT, 1961 -INCOME - ACCRUAL OF - CLARIFICATION REGARDING LIABILITY TO INCOME- TAX IN INDIA FOR A NON-RESIDENT SEAFARER RECEIVING REMUNERATION IN NRE (NON-RESIDENT EXTERNAL) ACCOUNT MAINTAINED WITH AN INDIAN BANK CIRCULAR NO. 13/2017 [F.NO.50010712017-FT&TR-V], DATED 11-4-2017 {AS CORRECTED BY CIRCULAR NO. 17/2017 [F.NO.500/07/2017-FT&TR-VL, DATED 26-4-2017} REPRESENTATIONS HAVE BEEN RECEIVED IN THE BOARD THAT INCOME BY WAY OF SALARY, RECEIVED BY NON- RESIDENT SEAFARERS, FOR SERVICES RENDERED 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 ACCOUNT MAINTAINED IN INDIA BY THE SEAFARER. 2. THE MATTER HAS BEEN EXAMINED IN THE BOARD SECTION 5(2)(A) OF THE INCOME-TAX ACT PROVIDES THAT ONLY SUCH INCOME OF A NON-RESIDENT SHALL BE SUBJECTED TO TAX IN INDIA THAT IS EITHER RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA. IT IS HEREBY CLARIFIED THAT SALARY ACCRUED TO A NON-RESIDENT SEAFARER FOR SERVICES RENDERED OUTSIDE INDIA ON A FOREIGN GOING SHIP (WITH INDIAN FLAG OR FOREIGN FLAG) SHALL NOT BE INCLUDED IN THE TOTAL INCOME MERELY BECAUSE THE SAID SALARY HAS BEEN CREDITED IN THE NRE ACCOUNT MAINTAINED WITH AN INDIAN BANK BY THE SEAFARER. ITA NO.395/17 SHYAMAL GOPAL CHATTOPADHYAY 6 SECTION 5 OF THE INCOME-TAX ACT. 1961 -INCOME - ACCRUAL OF - CLARIFICATION REGARDING LIABILITY TO INCOME-TAX IN INDIA FOR A NON-RESIDENT SEAFARER RECEIVING REMUNERATLON IN NRE (NON-RESIDENT EXTERNAL) ACCOUNT MAINTAINED WITH AN INDIAN BANK - CORRIGENDUM TO CIRCULAR NO. 13/2017 [F.NO.500/07/2017-FT&TR-VJ. DATED 11-4- 2017 CIRCULAR NO. 17/2017 [F.NO.500/07/2017-FT&TR-V], DATED 26-4-2017 IN LINE 4 OF PARAGRAPH NO. 2 OF THE CAPTIONED CIRCULAR, THE WORD 'FOREIGN SHIP' MAY BE READ AS 'FOREIGN GOING SHIP (WITH INDIAN FLAG OR FOREIGN FLAG)'. 11.1. A PERUSAL OF THE CIRCULAR REFERRED TO ABOVE SHOWS THAT SALARY ACCRUED TO A NON-RESIDENT SEAFARER FOR SERVICES RENDERED OUTSIDE INDIA ON A FOREIGN GOING SHIP (WITH INDIAN FLAG OR FOREIGN FLAG) SHALL NOT BE INCLUDED IN THE TOTAL INCOME MERELY BECAUSE THE SAID SALARY HAS BEEN CREDITED IN THE NRE ACCOUNT MAINTAINED WITH AN INDIAN BANK BY THE SEAFARER. REMITTANCES OF SALARY INTO NRE ACCOUNT MAINTAINED WITH AN INDIAN BANK BY A SEAFARER COULD BE OF TWO TYPES: (I) EMPLOYER DIRECTLY CREDITING SALARY TO THE NRE ACCOUNT MAINTAINED WITH AN INDIAN BANK BY THE SEAFARER; (II) EMPLOYER DIRECTLY CREDITING SALARY TO THE ACCOUNT MAINTAINED OUTSIDE INDIA BY THE SEAFARER AND THE SEAFARER TRANSFERRING SUCH MONEY TO NRE ACCOUNT MAINTAINED BY HIM IN INDIA. THE LATTER REMITTANCE WOULD BE OUTSIDE THE PURVIEW OF PROVISIONS OF SECTION 5(2)(A) OF THE ACT, AS WHAT IS REMITTED IS NOT 'SALARY INCOME' BUT A MERE TRANSFER OF ASSESSEE'S FUND FROM ONE BANK: ACCOUNT TO ANOTHER WHICH DOES NOT GIVE RISE TO 'INCOME'. IT IS NOT CLEAR AS TO WHETHER THE EXPRESSION 'MERELY BECAUSE' USED IN THE CIRCULAR REFERS TO THE FORMER TYPE OF REMITTANCE OR THE LATTER. TO THIS EXTENT THE CIRCULAR IS VAGUE. 11.2. IN THE INSTANT CASE, THE EMPLOYER HAS DIRECTLY CREDITED THE SALARY, FOR SERVICES RENDERED OUTSIDE INDIA, INTO THE NRE BANK ACCOUNT OF THE SEAFARER IN INDIA. IN OUR CONSIDERED OPINION, THE AFORESAID CIRCULAR IS VAGUE IN AS MUCH AS IT DOES NOT SPECIFY AS TO WHETHER THE CIRCULAR COVERS EITHER OF THE SITUATIONS OR BOTH THE SITUATIONS CONTEMPLATED ABOVE. HENCE WE DEEM IT FIT TO GIVE THE BENEFIT OF DOUBT TO THE ASSESSEE BY HOLDING THAT THE CIRCULAR COVERS BOTH THE SITUATIONS REFERRED TO ABOVE. THE RESULT OF SUCH INTERPRETATION OF THE CIRCULAR WOULD BE THAT THE PROVISIONS OF SEC.5(2)(A) OF THE ACT IS RENDERED REDUNDANT. BE THAT AS IT MAY, IT IS WELL SETTLED THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE AUTHORITIES. THIS POSITION HAS BEEN CONFIRMED BY THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION LTD REPORTED IN 267 ITR 272 (SC) WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULARS AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 4.5. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 4.6. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT IN THE INSTANT CASE, THE EMPLOYER HAS DIRECTLY CREDITED THE SALARY FOR SERVICES RENDERED OUTSIDE INDIA INTO THE BANK ACCOUNT OF SEAFARER IN INDIA. IN OUR CONSIDERED OPINION, THE CIRCULAR OF ITA NO.395/17 SHYAMAL GOPAL CHATTOPADHYAY 7 THE CBDT IS VAGUE IN AS MUCH AS IT DOES NOT SPECIFY AS TO WHETHER THE CIRCULAR COVERS EITHER OF THE SITUATIONS OR BOTH THE SITUATIONS CONTEMPLATED ABOVE. HENCE, WE DEEM FIT TO GIVE THE BENEFIT OF DOUBT TO THE ASSESSEE BY HOLDING THAT THE CIRCULAR COVERS BOTH THE SITUATIONS REFERRED ABOVE. THE RESULT OF SUCH INTERPRETATION OF THE CIRCULAR WOULD BE THAT THE PROVISION OF SECTION 5(2)(A) OF THE ACT IS RENDERED REDUNDANTLY. BE THAT AS IT MAY, IT IS WELL SETTLED PRINCIPLE THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE AUTHORITY. THIS POSITION HAS BEEN CONFIRMED BY THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272 (SC) WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THAT THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR AND IT IS CONTRARY TO THE TERMS OF THE STATUTE. THUS, RESPECTFULLY, FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE`S OWN CASE IN ASSESSMENT YEAR 2011-12, WHEREBY THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, AS SET OUT ABOVE. THEREFORE, THE GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED. WE ORDER ACCORDINGLY. 4.7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09/08/2017 . SD/ - ( A. T. VARKEY ) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; DATED 09/08/2017 SONALI BANERJEE/ SR. PS. / COPY OF THE ORDER FORWARDED TO : BY BYN SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, I.T.A.T., KOLKATA BENCHES, KOLKATA 1. / THE ASSESSEE - SHYAMAL GOPAL CHATTOPADHYAY 2. / THE RESPONDENT.- ITO, WARD-48(2), KOLKATA 3. ( ) / THE CIT(A), KOLKATA. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE. //TRUE COPY// BY ORDER