2019 (5) TMI 1900 - AT - Income Tax

Residential status of the assessee - Exemption u/s 10(14) - income received by the assessee for official work while on deputation in USA is living allowance - period of stay in India - residential status of the assessee - proof of fulfilment of twin conditions of 77 days of stay in India in the year under consideration and more than 365 days in the preceding four previous years - HELD THAT - AO himself stated that the assessee s deputation period was from 30.08.2009 to 14.01.2013. That being so, it is not clear as to how the AO determined that the period of stay of the assessee in India was 365 days in the four previous years. This issue requires to be examined / verified factually. As mentioned earlier, this issue is crucial to decide the residential status of the assessee, which is critical for assessment of the income received by the assessee in USA in the year under consideration. In view of the factual matrix of the case, as discussed above, it is deemed appropriate to set aside the orders of the authorities below and restore the matter to file of the AO to examine / verify the facts of the matter and decide the residential status of the assessee in the previous relevant to Assessment Year 2013-14 for assessment of the correct income of the assessee in accordance with law. If AO determines the status of the assessee to be Resident in India, he shall examine the taxability of the income received by the assessee in USA, in the light of the aforesaid decision of the ITAT Kolkata such in ITO Vs. Saptarishi Ghosh 2011 (9) TMI 397 - ITAT, KOLKATA cited by the assessee.

Summary

Issues:
1. Characterization of deputation income received in the USA as taxable income in India.
2. Determination of the residential status of the assessee for Assessment Year 2013-14.

Issue 1: Characterization of Deputation Income:
The assessee, an individual employed by Tata Consultancy Services Ltd. (TCS), was sent on deputation to the USA. The Assessing Officer (AO) observed discrepancies in the income declared by the assessee in India and the income earned in the USA. The AO determined the total income in India as per Form 16 and the income from the USA, resulting in the assessment of the global income of the assessee. The assessee contended that the deputation income from the USA should be exempt under section 10(14) of the Income Tax Act. However, the CIT(A) dismissed the appeal, stating that the assessee agreed to the assessment of global income and granting credit for taxes paid in the USA. The CIT(A) did not address the issue of whether the deputation income was exempt under section 10(14) or consider the judicial decision cited by the assessee. The Tribunal admitted additional grounds and evidence submitted by the assessee, directing a re-examination of the residential status and correct income assessment by the AO.

Issue 2: Determination of Residential Status:
The assessee raised additional grounds challenging the characterization of his residential status, claiming to be a non-resident due to his limited stay in India during the relevant year. The Tribunal considered conflicting stands taken by the assessee before the authorities, highlighting the importance of determining the correct residential status for assessing the income received in the USA. The AO's assertion regarding the assessee's stay in India for 365 days in the preceding years was questioned, requiring factual verification. As the residential status is crucial for assessing the income, the Tribunal set aside the orders and remanded the matter to the AO for a thorough examination. The Tribunal emphasized the need for the AO to afford the assessee a fair opportunity to present details and submissions for a lawful assessment.

In conclusion, the Tribunal allowed the assessee's appeal for Assessment Year 2013-14 solely for statistical purposes, emphasizing the importance of determining the residential status and assessing the income received in the USA accurately. The decision highlighted the need for a factual examination by the AO to ensure a fair and just assessment in accordance with the law.