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2018 (12) TMI 980 - AT - Income TaxIncome accrued in India - Addition applying the provisions of section 5(2)(a) - salary and allowances received - period of stay in India - residential status for the year Non-Resident in India as the assessee stayed in India for 13 days - assessee is an employee in IBM India Private Limited and during the financial year 2013-14 was sent on short term foreign assignment to United Kingdom - assessee claimed relief under Article 16(1) of India UK DTAA in respect of salary received in India - Held that - It is not in dispute that the assessee is a non-resident in India and is a tax resident of UK during the year under consideration. It is not in dispute that his employment is exercised in UK. We find that the ld AO had denied the relief claimed under India UK DTAA for not furnishing the tax residency certificate during the course of assessment proceedings. Admittedly the same was furnished by the assessee before the CIT-A for the first time. CITA without asking for a remand report from the ld AO in this regard proceeded to grant relief to the assessee. The revenue had raised one of the ground on account of violation of provisions of Rule 46A of the Income Tax Rules with regard to the tax residency certificate furnished only before the ld CITA. Hence in the interest of justice and fairplay we deem it fit and appropriate to remand this issue to the file of AO for the limited purpose of verification of the tax residency certificate furnished before the CIT-A. - Appeal of the revenue is allowed for statistical purposes.
Issues involved:
1. Justification of deleting the addition made by applying section 5(2)(a) of the Income Tax Act. Analysis: The appeal before the Appellate Tribunal ITAT Kolkata concerned the deletion of an addition of ?66,38,022 by the Commissioner of Income Tax (Appeals) against the order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2014-15. The main issue was whether the Commissioner was correct in deleting the addition made by the Assessing Officer. The assessee, an employee of IBM India Private Limited, was sent on a short-term foreign assignment to the United Kingdom during the financial year 2013-14, staying in India for only 13 days. The assessee received emoluments from IBM, including gross salary and foreign allowances. The assessee claimed exemption under the India-UK Double Taxation Avoidance Agreement (DTAA) for the salary earned in the UK. The Assessing Officer denied the relief claimed under the DTAA and brought the amount to tax. The Tribunal noted that the assessee had rendered services in the UK, supported by documents like the UK tax return and a certificate from IBM. The Tribunal referred to Article 16(1) of the India-UK DTAA, which states that salaries of a resident of one contracting state are taxable only in that state unless the employment is exercised in the other contracting state. The Tribunal found that the Assessing Officer denied the relief due to the absence of a tax residency certificate, which was later provided to the Commissioner. The Tribunal remanded the issue back to the Assessing Officer for verification of the tax residency certificate and granted relief to the assessee if satisfied. The appeal of the revenue was allowed for statistical purposes. This judgment primarily focused on the application of the India-UK DTAA in determining the taxability of the assessee's income earned during a foreign assignment. The Tribunal emphasized the importance of proper documentation and compliance with tax residency requirements under the DTAA. The decision highlighted the need for tax authorities to verify relevant documents before making tax assessments to ensure fair treatment for taxpayers.
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