Palecanda Bopanna Poonacha, Bangalore V. ITO, Bangalore

ITA 60/BANG/2011

• Counselvise Citation: 6021114 RSA 2011
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA CITIIIDR
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Residential status
• Section: 5(2); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.60/BANG/2011 ASSESSMENT YEAR : 2007-08 PALECANDA BOPANA POONACHA, NO.9, HAYES ROAD, RICHMOND TOWN, BANGALORE 560 025. PAN : AFXPP5788G VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD 1(3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, C.A. RESPONDENT BY : SHRI ETWA MUNDA, CIT-III(DR) DATE OF HEARING : 19.10.2011 DATE OF PRONOUNCEMENT : 19.10.2011 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 28.10.2010 OF THE CIT(APPEALS)-IV, BANGALORE. 2. THE GRIEVANCE OF THE ASSESSEE VIDE GROUND NO.2.1 TO 2.3 RELATES TO THE ADDITION OF RS.11,53,373 EARNED BY THE ASSESSEE AS SALARY OUTSIDE INDIA. THE FACTS OF THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE WAS AN ITA NO.60/BANG/11 PAGE 2 OF 4 EMPLOYEE OF M/S. RAVENSCROFT SHIP MANAGEMENT LTD., USA UNDER A CONTRACT OF EMPLOYMENT WITH M/S. ORIENT SHIP MANAGE MENT AND MANNING PRIVATE LTD., MUMBAI. HE SERVED AS A SECOND ENGINE ER ON BOARD THE VESSEL UP AGUAMARINHA. THE STAY OF THE ASSESSEE DURING THE PREVIOUS YEAR OUTSIDE INDIA WAS FOR 199 DAYS AND HE WAS QUALIFYIN G TO BE A NON-RESIDENT. THE AMOUNT IN QUESTION WAS DIRECTLY CREDITED TO THE ASSESSEES BANK ACCOUNT TO STANDARD CHARTERED BANK AND SBI, BANGALO RE. 3. THE ASSESSING OFFICER HELD THAT IN TERMS OF SECT ION 5(2) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS T HE ACT IN SHORT], A NON- RESIDENT IS CHARGEABLE TO TAX IN INDIA ON THE INCOM E RECEIVED OR INCOME DEEMED TO BE RECEIVED IN INDIA IF THE SERVICES ARE RENDERED OUTSIDE INDIA. ACCORDING TO HIM, THE ASSESSEE DID NOT GET ANY BENE FIT U/S. 91 OF THE ACT SINCE HE WAS NOT A RESIDENT OF INDIA NOR WAS THE RE SIDENT IN US OR ANY OTHER COUNTRY. ACCORDINGLY IT WAS HELD THAT INCOME WAS R ECEIVED / DEEMED TO HAVE BEEN RECEIVED IN INDIA, THOUGH IT ACCRUED OR A ROSE OUTSIDE INDIA. THE AO MADE THE ADDITION OF RS.11,53,373. 4. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A PPEALS), WHO CONFIRMED THE ADDITION MADE BY THE AO. NOW THE ASSE SSEE IS IN APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E FOLLOWING JUDGMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT :- (I) DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATIO N, BANGALORE V. DYLAN GEORGE SMITH, BANGALORE IN ITA NO.379/2010 VI DE JUDGMENT DATED 7.3.2011, ITA NO.60/BANG/11 PAGE 3 OF 4 (II) DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, B ANGALORE V. LOHITHAKSHAN NAMBIAR, BANGALORE IN ITA NO.359/2010 VIDE JUDGMENT DATED 22.3.2011, AND THE DECISION OF THIS BENCH OF THE TRIBUNAL IN T HE CASE OF DY. DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) V. SHRI KUMAR K . CHANDNANI IN ITA NO.145/BANG/2010 FOR THE A.Y. 2006-07 VIDE ORDER DA TED 31.5.2010. COPIES OF THE SAID ORDERS WERE FURNISHED. 6. IN HIS RIVAL SUBMISSIONS, THE LD. CIT(DR) STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IT IS NOTICED THAT ON A SIMILAR ISSUE, THE HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, BANGALORE V. DYLAN GEORGE SMITH, BANGALORE (SUPRA) HAS HELD AS UNDER: 3. IN THE INSTANT CASE, THOUGH THE ASSESSEE IS AN INDIAN, AT THE RELEVANT POINT OF TIME HE WAS A NON-RESIDENT. HE WA S WORKING FOR A FOREIGN COMPANY. FOR THE SERVICES RENDERED IN TH E INTERNATIONAL WATERS OUTSIDE THE COUNTRY HE WAS PAID SALARY. HE R ECEIVED THE SALARY ON BOARD THE SHIP. A PARTICULAR AMOUNT WAS ALLOCATED TO BE TRANSFERRED TO HIS NRE ACCOUNT IN INDIA. MERELY BE CAUSE A PORTION OF HIS SALARY WAS CREDITED TO HIS ACCOUNT I N INDIA, THAT WILL NOT RENDER HIM LIABLE TO TAX IN INDIA WHEN THE SERV ICES IS RENDERED OUTSIDE INDIA, SALARY IS PAID OUTSIDE INDIA AND HIS EMPLOYER IS A FOREIGN EMPLOYER. THE PROVISIONS OF THE ACT ARE NO T ATTRACTED TO THE SALARY OF THE ASSESSEE. 8. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICA L TO THE FACTS OF THE CASE INVOLVED IN THE AFORESAID REFERRED TO JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, THEREFORE KEEPING IN VIE W THE RATIO LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX, ITA NO.60/BANG/11 PAGE 4 OF 4 INTERNATIONAL TAXATION, BANGALORE V. DYLAN GEORGE S MITH, BANGALORE (SUPRA) , WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(AP PEALS) ON THIS ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE IS DEC IDED IN HIS FAVOUR. 9. THE NEXT ISSUE VIDE GROUND NO.3 RELATES TO THE L EVY OF INTEREST U/S. 234B OF THE ACT. AS REGARDS TO THIS GROUND, IT WAS THE COMMON CONTENTION OF BOTH THE PARTIES THAT THIS IS CONSEQUENTIAL IN N ATURE. WE ORDER ACCORDINGLY. 10. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF OCTOBER, 2011. SD/- SD/- ( SMT. P. MADHAVI DEVI ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 19 TH OCTOBER, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.