2018 (8) TMI 58 - AT - Income Tax

Accrual of income in India - Stay outside India - number of days stay in India - remuneration received by the assessee in respect of the foreign employment - Held that - It has been held in various decisions that when a citizen of India leaves India for employment abroad and stayed outside India for 182 days or more, then he becomes a non-resident and the income received from services rendered outside India cannot accrue or arise or deemed to accrue or arise in India and cannot be taxed in India notwithstanding the fact that the same is credited in the bank in India or TDS has been deducted on such income. As find the Delhi Bench of the Tribunal in the case of Pramod Kumar Sapra (2017 (11) TMI 567 - ITAT DELHI) has held that where the stay of the assessee, an employee of RIL, and deputed to Iraq outside India was for more than threshold 182 days, salary income of assessee for the previous year could not be held to be taxable because he was not resident of India - remuneration received by the assessee in respect of the foreign employment is not taxable in India under provision of section 5 (2) (a) of the IT Act, 1961 and such income cannot be taxed in India when the assessee stayed outside India for more than 182 days Since the assessee in the instant case has stayed outside India for more than 182 days, therefore, respectfully following the decisions cited (supra) set aside the order of the CIT (A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee

Summary

Issues involved:
1. Taxability of salary received outside India by an individual.
2. Determination of residential status for tax purposes.
3. Applicability of relief under section 90 of the Income Tax Act.

Issue 1: Taxability of salary received outside India by an individual:
The case involved an individual who received salary outside India (Korea) but did not declare it in the return of income. The Assessing Officer added the salary income earned in Korea to the total income of the assessee. The CIT (A) upheld this addition, stating that the appellant did not claim non-resident status during the assessment proceedings and failed to provide sufficient evidence to substantiate the claim. The Tribunal, however, considered various precedents and held that when an individual stays outside India for 182 days or more, the income received from services rendered outside India cannot be taxed in India, even if TDS is deducted on such income. Citing relevant case laws, the Tribunal directed the Assessing Officer to delete the addition of the salary income earned in Korea.

Issue 2: Determination of residential status for tax purposes:
The Assessing Officer and CIT (A) considered the appellant as a resident of India for the relevant assessment year based on the information provided in the return of income and lack of evidence supporting non-resident status. However, the Tribunal held that the appellant, who stayed outside India for more than 182 days, should be considered a non-resident for tax purposes. The Tribunal emphasized that the residential status is crucial in determining the taxability of income earned outside India and cited relevant case laws to support its decision.

Issue 3: Applicability of relief under section 90 of the Income Tax Act:
The appellant did not claim relief under section 90 of the Income Tax Act, which allows for relief from double taxation for income earned in a foreign country. The Assessing Officer and CIT (A) did not consider this relief due to the lack of evidence supporting non-resident status. However, the Tribunal, after determining the non-resident status of the appellant, directed the Assessing Officer to delete the addition of the salary income earned in Korea, thereby implying the applicability of relief under section 90 in this case.

In conclusion, the Tribunal allowed the appeal filed by the assessee, directing the Assessing Officer to delete the addition of the salary income earned in Korea due to the appellant's non-resident status and the taxability of income earned outside India. The case highlights the importance of establishing residential status and considering relevant provisions and case laws in determining the taxability of foreign income.