Sh. Rajesh Joshi, Jalandhar V. The Income Tax Officer, Jalandhar

ITA 458/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8676 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Amritsar
• Next Hearing Date: 19-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 06-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: DINESH SARNA
• Keywords: Business income; Residential status; Salary income; Source of fund; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 142(1); 5(2); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: (CIRCUIT BENCH AT JALANDHAR) BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.458/ASR/2016 (ASSESSMENT YEAR-2011-12) SHRI RAJESH JOSHI PROP YES ENTERPRISES, OPPOSITE UCO BANK, JANDU SINGHA, JALANDHAR. PAN NO.AGIPJ8312L (ASSESSEE) VS .. ITO WARD-4(1) JALANDHAR. (REVENUE) ASSESSEE BY SHRI . DINESH SARNA, AR. REVENUE BY SHRI BHAWANI SHANKAR,DR. ORDER PER, A. D. JAIN, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE FOR ASSE SSMENT YEAR 2011-12, CONTENDED THAT THE LD. CIT(A) HAS ERRED IN REJECTIN G THE APPLICATION FILED U/S 154/155 OF THE I.T. ACT. 2. THE ASSESSEE IS INDIVIDUAL DERIVES INCOME FROM T RADING, SALARY AND INTEREST. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILE D RETURN OF INCOME DECLARING NET DATE OF HEARING 19.01.2017 DATE OF PRONOUNCEMENT 24 .02.2017 I.T.A NO.458/ASR/2016 2 INCOME OF RS.7,69,610/-. THE CASE WAS SELECTED FOR SCRUTINY. NOTICES UNDER SECTIONS 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE, THE ASSESSEE FILED THE REQUISITE INFORMATION. DURING THE YEAR, THE ASS ESSEE HAD RECEIVED SALARY OUTSIDE INDIA. THE SAME WAS CREDITED IN INDIAN BANK, GHAZIA BAD. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THESE RECEIPTS WERE N OT TAXABLE IN INDIA. THE ASSESSEE SUBMITTED THAT HE WAS EMPLOYEE WITH US BASED COMPAN Y, M/S TRANSOCEAN SEDCO FOREX INTERNATIONAL INC OF GUNEA EQUATORIAL; THAT T HE ASSESSEE RECEIVED A SALARY FROM THIS COMPANY FOR WORK DONE OUTSIDE INDIA; THAT AS SUCH, IT WAS NOT TAXABLE IN INDIA; AND THAT MOREOVER, SAID COMPANY HAD ALSO MAD E TDS FROM THE SALARY. THE ASSESSEE FURNISHED A CERTIFICATE IN THIS REGARD BEF ORE THE AO. THE AO, HOWEVER, FRAMED THE ASSESSMENT ON 19.03.2014 AT AN INCOME OF RS.72,81,160/-, MAKING THE ADDITION OF RS.65,11,553/-, TREATING THE SALARY REC EIVED BY THE ASSESSEE AS TAXABLE IN INDIA. THE LD. CIT(A), VIDE ORDER DATED 19.11.2015 , TREATED THE ASSESSEE AS A RESIDENT UNDER SECTION 6(5) OF THE ACT AND GAVE BEN EFIT OF TAX PAID IN THE SOURCE COUNTRY, AS PER THE PROVISIONS OF SECTION 91 OF THE ACT. THE ASSESSEES APPEAL WAS PARTLY ALLOWED. THE ASSESSEE FILED A RECTIFICATION APPLICATION U/S 154 OF THE ACT BEFORE THE LD. CIT(A) AND REQUESTED THAT THE ASSESS EE BE NOT TREATED AS A RESIDENT U/S 6(5) OF THE ACT, IN VIEW OF THE DECISION OF THE AGRA BENCH OF THE TRIBUNAL IN ARVIND SINGH CHAUHAN VS. ITO, RENDERED IN ITA NOS . 319 AND 320/AGRA/2013. I.T.A NO.458/ASR/2016 3 THE LD. CIT(A), VIDE IMPUGNED ORDER DATED 18.07.201 6, REJECTED THE ASSESSEES APPLICATION. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE LD. CIT(A) HAS ERRED IN REJECTING THE ASSESSEES RECTIFICATION APPLICATI ON BY WRONGLY INTERPRETED THE PROVISIONS OF SECTION 6(5) OF THE ACT, WITHOUT TAKI NG INTO CONSIDERATION ARVIND SINGH CHAUHAN (SUPRA), WHICH IS IN FAVOUR OF THE A SSESSEE AND WHICH WAS SPECIFICALLY CITED BY THE ASSESSEE BEFORE THE LD. C IT(A). 5. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 6. IN HIS APPLICATION FOR RECTIFICATION FILED BY TH E ASSESSEE BEFORE THE LD. CIT(A), AS REPRODUCED BY THE LD. CIT(A) AT PAGES 2 TO 4 OF THE IMPUGNED ORDER, THE ASSESSEE STATED, INTER ALIA, THAT; .. SIR, IN OUR CASE ASSESSEE HAVE RESIDENT STATUS FOR ALL THE INCOME WHICH ACCRUE OR ARISE AND DEEMED TO BE ACCRUE OR ARISE IN INDIA BUT THE INCOME WHICH ACCRUE OR ARISE OUTSIDE INDIA, ASSESSEE SHALL NOT BE TREATED AS RESIDENT FOR THAT INCOME. IN SUPPORT OF THIS RELIANCE IS BEING PLACED UPON THE DECISION OF ARVIND SINGH CHAUHAN VS. ITO, IN ITA NO.319 AND 320/AGRA/2013, WHEREIN THE HONBLE BENCH HELD THAT ..6. WE FIND THAT THE AO HAS HIMSELF TAKEN NOTE OF THE NUMB ER OF DAYS OF HIS STAY OUTSIDE INDIA, AS PER PASSPORT ENTRIES, AND GIVEN A CATEGOR ICAL FINDING THAT THE ASSESSEES I.T.A NO.458/ASR/2016 4 RESIDENTIAL STATUS, U/S 6, IS OF NON-RESIDENT. YE T, HE HAS PROCEEDED TO TREAT THE ASSESSEE AS RESIDENT FOR ALL PURPOSES ON THE BASI S OF REASONING THAT ONCE ASSESSEE HAS A RESIDENTIAL STATUS OF RESIDENT FOR THE PURP OSE OF BANK INTEREST AND PENSION SCHEME, AND IN VIEW OF OPERATION OF SECTION 6(5), T HE ASSESSEE IS REQUIRED TO BE TREATED AS RESIDENT FOR THE PURPOSES OF ALL SOURC ES OF HIS INCOME. HOWEVER, THE REASONING SO ADOPTED BY THE AO IS BEST OF FUNDAMENT AL CONCEPTUAL MISCONCEPTION OF FACTS AS ALSO OF LAW.. 7. THIS WOULD SO THAT ONCE AN INCOME IS RECEIVED OU TSIDE INDIA WHETHER IN REALITY OR ON CONSTRUCTIVE BASIS, THE MERE FACT THA T IT HAS BEEN REMITTED TO INDIA WOULD NOT BE DECISIVE ON THE QUESTION AS TO INCOME IS TO BE TREATED AS HAVING BEEN RECEIVED IN INDIA. THE CONNOTATION OF AN INCOME HAV ING BEEN RECEIVED ARE QUALITATIVELY DIFFERENT. THE SALARY AMOUNT IS RECEI VED IN INDIA IN THIS CASE BUT THE SALARY INCOME IS RECEIVED OUTSIDE INDIA. IT IS ELEM ENTARY THAT AN INCOME CANNOT BE TAXED MORE THAN ONCE BUT IF, AT EACH POINT OF RECEI PT, THE INCOME IS TO BE TAXED, IT MAY HAVE TO BE TAXED ON MULTIPLE OCCASIONS. IN THIS VIEW OF THE MATTER, IN A SITUATION IN EACH THE SALARY HAS CREDITED OUTSIDE I NDIA, AND, THEREAFTER, BY AN ARRANGEMENT, SALARY IS REMITTED TO INDIA AND MADE A VAILABLE TO THE EMPLOYEE, IT WILL NOT BE CONSTITUTE RECEIPT OF SALARY IN INDIA BY THE ASSESSEE SO AS TO TRIGGER TAXABILITY U/S 5(2) (A) OF THE ACT. .. I.T.A NO.458/ASR/2016 5 8. IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS OBSERV ED, INTER ALIA, AS UNDER: (2). WE HAVE CONSIDERED THE SUBMISSIONS AS CONTAINED IN HIS RECTIFICATION APPLICATION NOW FILED BY THE ASSESSEE. WE HAVE ALSO GONE THROUG H THE APPELLATE ORDER DATED 19.11.2015 PASSED IN THE CASE OF THE ASSESSEE AS WE LL AS THE RELEVANT PROVISIONS OF THE ACT MORE PARTICULARLY THE PROVISIONS OF SUB-SEC TION 5 OF SECTION 6 OF THE ACT. WHILE PASSING THE ORDER IN THE CASE OF THE ASSESSEE , THE ASSESSEE HAS BEEN TREATED AS RESIDENT IN VIEW OF SPECIFIC PROVISIONS OF SUB-SECT IONS 5 OF SECTION 6 OF THE ACT AS THE STATUS OF THE ASSESSEE IS (SIC) RESPECTIVE BUSI NESS INCOME AND INCOME FROM OTHER SOURCES IS RESIDENT. THE SUB-SECTION 5 OF SECTION 6 SPECIFICALLY PROVIDES THAT IF A PERSON IS A RESIDENT IN INDIA AND IN A PREVIOUS YEA R RELEVANT TO AN ASSESSMENT YEAR IN RESPECT OF ANY SOURCE OF INCOME THEN HE SHALL BE DEEMED TO BE RESIDENT IN INDIA IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R IN RESPECT OF EACH OF HIS OTHER SOURCES OF INCOME AS WELL. AS THE STATUS OF THE ASS ESSEE IS RESIDENT FOR BUSINESS INCOME WHICH IS ONE OF THE SOURCES OF INCOME SHOWN IN THE RETURN OF INCOME, HE SHALL HAVE TO BE TREATED AS RESIDENT FOR OTHER SOUR CES OF INCOME IN VIEW OF SPECIFIC PROVISIONS OF SUB-SECTION 5 OF SECTION 6 OF THE ACT . THE BELIEF NOW BEING TAKEN IN THE RECTIFICATION APPLICATION IS THE SAME AS WAS TA KEN EARLIER WHILE FILING RECTIFICATION APPLICATION. WE ARE OF THE CONSIDERED OPINION THAT THERE IS NOTHING NEW IN THE RECTIFICATION APPLICATION NOW FILED BY T HE ASSESSEE. WE ARE FURTHER OF THE OPINION THAT THE PROVISIONS OF SECTION 6(5) OF THE ACT ARE CLEARLY ATTRACTED IN THE I.T.A NO.458/ASR/2016 6 CASE OF THE ASSESSEE AND THE STATUS OF THE ASSESSEE HAS CORRECTLY BEEN TAKEN AS RESIDENT WHILE DISPOSING OFF OF THE APPEAL FILED BY THE APPELLANT. 9. IN VIEW OF THE ABOVE STATED FACTS AND CIRCUMSTAN CES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE STATUS OF THE ASSESSEE HAS CORRECTLY BEEN TREATED AS RESIDENT IN INDIA IN THE ASSESSMENT AS WELL AS THE APPELLATE ORDER AND THERE IS NO MISTAKE IN THE APPELLATE ORDER DATED 19.11.2015 WHI CH CAN BE SAID TO BE APPARENT FROM THE RECORD AND IS RECTIFIABLE U/S 154/155 OF T HE ACT. WE WOULD ALSO LIKE TO MAKE IT CLEAR THAT THE STATUS OF THE ASSESSEE HAS B EEN TREATED AS RESIDENT IN INDIA NOT IN VIEW OF PROVISIONS OF SECTION 6(1) (C) (R.W. EXP LANATION) OF THE ACT BUT THE ASSESSEE HAS BEEN TREATED AS RESIDENT IN VIEW OF SP ECIFIC PROVISIONS OF SECTION 6(5) OF THE ACT. WE ARE THEREFORE, CONSIDERED OPINION TH AT THERE IS NO MISTAKE APPARENT FROM THE RECORD IN THE APPELLATE ORDER DATED 19.11. 2015 WHICH CAN BE SAID TO BE RECRIFIABLE U/S 154/155 OF THE ACT. AS SUCH, THE RE CTIFICATION APPLICATION NOW FILED BY THE ASSESSEE IN THIS CASE IS ALSO REJECTED. 10. IT IS SEEN THAT THE ASSESSEE HAD SPECIFICALLY R ELIED ON ARVIND SINGH CHAUHAN (SUPRA), IN HIS APPLICATION FILED ON 04.07 .2016 BEFORE THE LD. CIT(A), AS NOTED BY THE LD. CIT(A) HIMSELF. HOWEVER, A BARE PE RUSAL OF THE LD. CIT(A)S ORDER, AS REPRODUCED ABOVE, EVINCES THAT EVIDENTLY, THE LD . CIT(A) HAS NOT DEALT WITH THE SAID DECISION. THE LD. CIT(A)S ORDER, THEREFORE, I S CLEARLY A RESULT OF COMPLETE NON- RESIDING AND NON CONSIDERATION OF THE CASE LAW RELI ED ON BY THE ASSESSEE. THIS HAS I.T.A NO.458/ASR/2016 7 LED TO PREJUDICE BEING CAUSED TO THE ASSESSEE. HENC E, IN THE INTEREST OF JUSTICE, WE DEEMED TO APPROPRIATE TO REMIT THIS MATTER TO THE L D. CIT(A), TO BE DECIDE AFRESH IN ACCORDANCE WITH LAW, ON CONSIDERING THE AFORESAID C ASE LAW, I.E., ARVIND SINGH CHAUHAN (SUPRA). THE ASSESSEE SHALL BE PROVIDED DU E AND ADEQUATE OPPORTUNITY OF HEARING AND, NO DOUBT, THE ASSESSEE SHALL CO-OPERAT E IN THE FRESH PROCEEDINGS BEFORE THE LD. CIT(A). ALL PLEAS AVAILABLE TO THE ASSESSEE UNDER THE LAW SHALL REMAIN SO AVAILABLE TO HIM. ORDER ACCORDINGLY. 11. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/0 2/2017. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUTANT MEMBER JUDICIAL MEMBER DATED 24/02/2017 *AKV* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT BY ORDER AR/SR.P.S./P.S.