SHIV RAM JAISWAL, MUMBAI V. ITO (IT) WD 3(1), MUMBAI

ITA 4860/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54989 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PA RATHASARATHI NAIK
• Assessee Lawyers: H M SINGHVI
• Keywords: Salary income; Services rendered outside India; Reassessment proceedings
• Section: 5(2); 147; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E : MUMBAI BEFORE SHRI N.V. VASUDEVAN, (JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.4860/MUM/2010 ASSESSMENT YEAR : 2005-06 SHIV RAM JAISWAL A-79/104, ONGC COLONY GOKULDHAM, GOREGAON (E) MUMBAI-400 063. ..( APPELLANT ) P.A. NO. (AEUPJ 9616 B) VS. INCOME TAX OFFICER (INTL. TAXATION) WARD 3(1) SCINDIA HOUSE, BALLARD PIER MUMBAI-400 038. ..( RESPONDENT ) APPELLANT BY : SHRI H.M. SINGHVI RESPONDENT BY : SHRI PA RATHASARATHI NAIK DATE OF HEARING : 18.8.2011 DATE OF PRONOUNCEMENT : 24 TH AUGUST, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 20.01.2010 FOR THE ASSESSMENT YEAR 2005-06. THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING TAXABI LITY OF RS.7,02,952/- AS SALARY INCOME OF THE ASSESSEE WHO WAS NON-R ESIDENT DURING THE RELEVANT YEAR. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE A SSESSEE WHO WAS AN EMPLOYEE OF ONGC AND NON-RESIDENT DURING T HE YEAR, HAD ITA NO.4860/M/10 A.Y:05-06 2 RECEIVED SALARY OF RS.7,02,952/- IN INDIAN RUPEE. THE ASSESSEE HAD CLAIMED EXEMPTION OF THE SAID INCOME ON THE GROUND THA T SALARY WAS FOR THE SERVICES RENDERED OUTSIDE INDIA. AO HOWEVER, R E-OPENED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT. DURING THE REASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT HE WAS AN EMPLOYEE OF ONGC LTD. AND W.E.F. 23.5.2003 HE WAS SE CONDED TO ONGC VIDESH LTD. (OVL), NEW DELHI AND THEREAFTER HE WAS AGAIN SECONDED TO ONGC NILE GANGA BV (ONG BV), AMSTERDAM, NE THERLANDS WHICH DEPUTED HIM TO A PROJECT AT KHARTOUM IN SUDAN O IL & GAS FIELD OPERATION. AS PER THE GUIDELINES, THE SECONDEES WERE P AID COMPOSITE SALARY WHICH WAS TO BE PAID PARTLY IN INDIAN RUPEES EQ UIVALENT TO SALARY AND ALLOWANCES WHICH HE WOULD HAVE DRAWN IN IND IA AND BALANCE WAS TO BE PAID IN FOREIGN EXCHANGE OVERSEAS. THE SECOND EES WERE TO CONTINUE TO DRAW INDIAN PAY AND ADVANCE AS PER THEIR U SUAL ENTITLEMENTS. IT WAS ARGUED THAT THE SALARY RECEIVED IN INDIA WAS FOR SERVICES RENDERED ABROAD AND THEREFORE, THE SAME WAS NO T TAXABLE IN INDIA AS ASSESSEE WAS A NON-RESIDENT. THE AO WAS HOWEVER N OT SATISFIED. HE REFERRED TO PROVISIONS OF SECTION 5(2) RELA TING TO TAXABILITY OF INCOME OF NON RESIDENT WHICH READS AS UNDER :- SUBJECT TO THE PROVISIONS OF THIS ACT, THE TOTAL I NCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A NON-RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED FR OM WHICH (A) IS RECEIVED OR IS 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 ACCRUE OR ARISE TO HIM IN INDIA DURING SUCH YEAR. 2.1 THE AO OBSERVED THAT THE SUM OF RS.7,02,952/- HAD BEEN RECEIVED IN INDIA FROM EMPLOYER ONGC, MUMBAI WHO HAD ALSO DEDUCTED TAX OF RS.1,81,741/- IN INDIA. THE FOREIGN COMPONENT OF THE ITA NO.4860/M/10 A.Y:05-06 3 SALARY WHICH HAD ACCRUED AND RECEIVED ABROAD WAS NOT TAX ABLE BUT THE SALARY RECEIVED IN INDIA HAD TO BE TAXED. AO ACCORDINGL Y ASSESSED THE SUM OF RS.7,02,952/- AS SALARY INCOME OF THE ASSESSEE. IN APPEAL, THE ASSESSEE SUBMITTED THAT IT WAS COMPELLED TO RECEIVE PART PA YMENT IN INDIA AS PER GUIDELINES BUT PAYMENT WAS FOR SERVICES RE NDERED ABROAD AND THEREFORE, NOT TAXABLE. HE ALSO RELIED ON CERTAIN DECISIONS OF THE TRIBUNAL BUT THE SAME WERE DISTINGUISHED BY CIT (A) WHO OBSERVED THAT THE ASSESSEE REMAINED THE EMPLOYEE OF ONGC IN INDIA FROM WHOM THE SALARY HAD BEEN RECEIVED DURING THE YEA R. FORM-16 ISSUED BY ONGC INDIA CLEARLY STATED THAT THE ASSESSEE WAS E MPLOYEE OF ONGC, INDIA WHO HAD DEDUCTED TAX AT SOURCE. THEREF ORE, CIT(A) CONFIRMED THE ORDER OF THE AO ASSESSING THE SUM OF RS.7,0 2,952/- AS SALARY INCOME OF THE ASSESSEE. 3. BEFORE US, THE LD. AR FOR THE ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND ARGUED THAT THE AMOUNT HAD BEEN RECEIVED IN INDIA FOR SERVICES RENDERED OUTSIDE AND SINCE THE ASSESSEE WAS NON-RESIDENT, SAME WAS NOT TAXABLE IN INDIA. RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL IN CASE OF RANJIT KUMAR BOSE VS. ITO (18 ITD 230) AND THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. ASHOK JAIN IN ITA NO.5598, 6540,3921 AND 6750/1992. ACCORDINGLY IT WAS URGED THA T THE ADDITION MADE SHOULD BE DELETED. THE LD. DR ON THE OTHER HAN D STRONGLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. HE REFERRED TO THE TERMS AND CONDITIONS APPLICABLE TO SECONDEES PLACED AT PAGE-25 OF TH E PAPER BOOK. THE CLAUSE 3.2 OF THE TERMS AND CONDITIONS CLEARLY STATED THAT SECONDEES CONTINUED TO DRAW THEIR INDIAN PAY AND ALLOWA NCES AND REIMBURSEMENTS AT THEIR PRESENT PLACE OF POSTING AS PER USUAL ENTITLEMENTS. FURTHER, CLAUSE 3.4 PROVIDED THAT CERTAI N ALLOWANCES, ITA NO.4860/M/10 A.Y:05-06 4 REIMBURSEMENTS AND INCENTIVES SHALL CONTINUE TO BE DRAWN IN THE LAST PLACE OF POSTING IN INDIA OF THE SECONDEES. IT WAS THERE FORE CLEAR THAT THESE PAYMENTS HAD BECOME DUE IN INDIA AND WERE ALSO RE CEIVED IN INDIA AND, THEREFORE TAXABLE IN INDIA. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVA L CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ASSESSMENT OF RS.7,02,952/- RECEIVED BY THE ASSESSEE AS SALARY INCOME IN I NDIA. THE ASSESSEE WAS AN EMPLOYEE OF ONGC LTD. INDIA WHO HAD SECON DED HIM TO ONGC NILE GANGA BV (ONG BV), AMSTERDAM, NETHERLAN DS AND THEN DEPUTED TO A PROJECT AT KHARTOUM IN SUDAN. THE ASSESSE E WAS A NON- RESIDENT DURING THE RELEVANT YEAR BUT AS PER TERMS AND CONDITIONS APPLICABLE TO SECONDEES, THE ASSESSEE WAS ENTITLED TO DRAW I NDIAN PAY AND ALLOWANCES, AND REIMBURSEMENTS AS PER HIS USUAL ENTITL EMENTS IN INDIA. THUS AS PER TERMS AND CONDITIONS OF EMPLOYMENT, A SUM OF RS.7,02,952/- HAD BECOME DUE TO THE ASSESSEE IN INDIA AND HAD ALSO BEEN RECEIVED IN INDIA. THE ISSUE IS WHETHER SUCH SUM CAN BE TAXABLE IN INDIA. 4.1 THE TAXABILITY OF THE INCOME OF NON-RESIDENT IS G OVERNED BY THE PROVISIONS OF SECTION 5(2) WHICH HAS BEEN REPRODUCED IN PARA-2 EARLIER. AS PER THE SAID PROVISIONS, THE TOTAL INCOME OF ANY PREVIOUS YEAR OF A NON-RESIDENT INCLUDES ALL INCOME FROM WHATEV ER SOURCE WHICH IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA IN SUCH YEAR BY OR ON BEHALF OF THE ASSESSEE OR WHICH ACCRUES OR ARISES IN INDIA O R IS DEEMED TO ACCRUE OR ARISE TO HIM IN INDIA. IT IS THUS CLEAR THA T INCOME OF NON- RESIDENT ARISING FROM ANY SOURCE WHETHER IN INDIA OR AB ROAD WILL BE TAXABLE IN INDIA IF THE SAME IS RECEIVED OR DEEMED TO BE RECEIVED IN INDIA OR IN CASE INCOME ACCRUES OR ARISES OR IS DEEMED TO ACCR UE OR ITA NO.4860/M/10 A.Y:05-06 5 ARISE IN INDIA. IN THIS CASE AS PER TERMS AND CONDITIONS O F EMPLOYMENT THE AMOUNT HAD BECOME DUE FOR PAYMENT IN INDIA AND H AD ALSO BEEN RECEIVED IN INDIA AND, THEREFORE, THE SAME HAD TO BE TAXED IN INDIA. THE DECISIONS OF THE TRIBUNAL RELIED UPON BY THE LD. A R ARE DISTINGUISHABLE. IN CASE OF ACIT VS. ASHOK JAIN (SUPRA), T HE DISPUTE WAS REGARDING TAXABILITY OF SALARY PAID OUTSIDE INDIA. THE CASE OBVIOUSLY IS NOT APPLICABLE AS IN THIS CASE THE SALARY HAD BEEN PAID IN INDIA. IN CASE OF RANJIT KUMAR BOSE VS. ITO (SUPRA), TH E TRIBUNAL NOTED THAT SALARY INCOME HAD ACCRUED OUTSIDE INDIA BUT RECEIVED IN INDIA. THE TRIBUNAL OBSERVED THAT UNDER THE PROVISIO NS OF SECTION 15 SALARY INCOME WAS CHARGEABLE ON DUE BASIS IRRESPECTIVE OF THE FACT WHETHER IT HAD BEEN RECEIVED OR NOT. SINCE SALARY HAD NOT BECOME DUE IN INDIA IN THAT CASE, THE TRIBUNAL HELD THAT THE SAME COULD NOT BE TAXED IN INDIA ON RECEIPT BASIS. THE CASE IS OBVIOUSLY DI STINGUISHABLE. AS POINTED OUT EARLIER, IN THIS CASE AS PER TERMS AND COND ITIONS OF EMPLOYMENT THE SALARY HAD BECOME DUE IN INDIA AND ALSO RECEIVED IN INDIA. THE SAID CASE IS THEREFORE, OF NO HELP TO THE A SSESSEE. THE INCOME HAS BEEN RIGHTLY ASSESSED IN INDIA. WE, THEREFORE , CONFIRM THE ORDER OF CIT(A). 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.8.2011. SD.- SD/- (N.V. VASUDEVAN) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24.8.2011. JV. ITA NO.4860/M/10 A.Y:05-06 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.