2022 (10) TMI 112 - AT - Income Tax

Exemption u/s 10(6)(ii) - remuneration received by her from Austrian Trade Commission, Austrian Embassy under full time employment - As per AO assessee is not a staff member or any official, but, was engaged as Consultant on contractual agreement basis, therefore, the exemption u/s 10(6)(ii) of the Act is not available to her - HELD THAT - In the official endorsement, it has been mentioned that the assessee is responsible as head of Technology at Austrian Trade Commission in New Delhi. The certificate issued by the Austrian Embassy clearly reveals that the assessee was appointed as Consultant in the Austrian Trade Commission in the field of Mechanical Engineering Terotechnology and Automotive Industry, from the relevant financial period and subsequent certificate dated 17.06.2019 further clarify that the assessee has been under full time employment with Austrian Embassy, Commercial Section. This is also in conformity with the entries in the passport of the assessee. The copy of passport also reveals that the assessee is not having an ordinary passport, but, a service passport issued by the Government of Austria. Clause (ii) of sub-section (6) of section 10 clearly stipulates that the remuneration received as an official by whatever name called of an Embassy (which is Austrian Embassy in the present case) is not includable in the taxable income of an assessee. Therefore, the certificate issued by the Austrian Embassy cannot be doubted or disregarded in view of said provision and other surrounding facts and circumstances and duties assigned to the assessee by the Austrian Embassy are also mentioned in her passport by the Government of Austria. Therefore, assessee has been in full time employment with the Austrian Embassy, Commercial Section. CIT(A) has also taken a basis for denying the exemption u/s 10(6)(ii) of the Act that the assessee is not eligible for any pension, social or accident insurance, gratuity, etc., but, this is not a precondition for allowing exemption u/s 10(6)(ii) of the Act. Therefore, the basis on which the ld.CIT(A) denied the benefit of the said exemption cannot be held as good and sustainable. As it is not the case of the authorities below that the officials of Indian Embassy are not getting the same benefit and thus the claim of the assessee is hit by proviso to clause (ii) of sub-section (6) of Section 10 of the Act. In the submissions, DR could not dispute that the Treaty at Vienna Convention was signed by India and Austria and both are under obligation to abide by the same and this fact also supports the case of the assessee that she is entitled to exemption u/s 10(6)(ii) of the Act on the remuneration received by her from Austrian Trade Commission, Austrian Embassy under full time employment. Assessee appeal allowed.

Summary

Issues:
1. Validity of the order passed by Commissioner of Income Tax (Appeals)
2. Interpretation of section 10(6)(ii) of the Income-tax Act
3. Exemption eligibility for remuneration received by the assessee as an official of the Austrian Trade Commission

Analysis:

Issue 1: Validity of the order passed by Commissioner of Income Tax (Appeals)
The appeal challenged the order of the CIT(A) for Assessment Year 2010-11, raising concerns about the order being against natural justice and neglecting submitted documents. The assessee, appointed as a Consultant in the Austrian Trade Commission, argued that all necessary information was provided to authorities. The representative contended that the remuneration received was exempt under section 10(6)(ii) of the Act due to the nature of employment and duties performed. The Senior DR supported the assessment, highlighting the contractual nature of the engagement, which, in their view, did not qualify for the exemption under section 10(6)(ii). The Tribunal noted the procedural history, including an ex parte assessment by the AO and subsequent submissions before the CIT(A).

Issue 2: Interpretation of section 10(6)(ii) of the Income-tax Act
The Tribunal analyzed section 10(6)(ii), which exempts remuneration received by an official of a foreign state's representation in India. The legislation provides conditions for exemption, including reciprocity with the foreign state. The Tribunal emphasized the legislative intent behind the provision and the requirements for eligibility under this section.

Issue 3: Exemption eligibility for remuneration received by the assessee as an official of the Austrian Trade Commission
The Tribunal reviewed the certificates issued by the Austrian Embassy, confirming the assessee's employment as a Consultant and later as a full-time employee. The Tribunal observed that the duties assigned to the assessee were in line with the exemption criteria under section 10(6)(ii). The Tribunal found that the denial of exemption by the CIT(A) based on absence of certain benefits like pension or insurance was not a valid ground for disqualification. The Tribunal also considered the Vienna Convention and the obligations of India and Austria under it, supporting the assessee's claim for exemption. Consequently, the Tribunal allowed the appeal, directing the AO to grant exemption under section 10(6)(ii) to the assessee.

In conclusion, the Tribunal upheld the assessee's argument regarding the exemption eligibility under section 10(6)(ii) of the Act based on the nature of employment and the supporting documents provided, ultimately allowing the appeal against the CIT(A)'s order.