2024 (2) TMI 606 - AT - Income Tax

Salary income from foreign company for short term foreign assignment - salary income and interest income was not offered to tax in India on the ground that the assessee is a non-resident Indian and taxed on his total income in the country of residence - AO denied the claim because the assessee failed to furnish a tax residency certificate from United Kingdom which is required in order to claim DTAA benefit u/s 90 - HELD THAT - As we notice that the assessee carried the matter before the CIT(A) and placed the copy of tax residency certificate of United Kingdom. Since this document was filed for the first time the CIT(A) called for a remand report. In the remand report AO accepted that copy of tax residency certificate has been received and the same was issued by HM Revenue and Customs, UK in which it was declared that the assessee was a resident of the UK during the period from 06.04.2013 to 05.04.2014. AO also stated in the remand report that claim of DTAA benefit of the assessee is valid and therefore the salary income received for the work during stay at United Kingdom is exempt. CIT(A) called for a report from Ld. CIT(A)-OSD(IT) Range-2, Kolkata but the fact mentioned by the AO in the remand report stood uncontroverted. Surprisingly Ld. CIT(A) has still not allowed the ground of appeal. Before us, assessee has placed reliance on the evidences and after considering the same and also the remand report issued by the AO , we are inclined to hold that the assessee possesses tax residency certificate of United kingdom for a period from 06.04.2013 to 05.04.2014 and the instant year under the appeal pertains to FY 2013-14 and therefore since the assessee has offered to tax for the year in United kingdom, assessee deserves DTAA benefit u/s 90 of the Act. Thus the claim made by the assessee is found to be correct. We therefore set aside the finding of Ld. CIT(A) and delete the addition - Appeal of assessee are allowed.

Summary

Issues involved:
The appeal involves the question of taxability of salary income in India for a non-resident Indian who claimed relief under Double Taxation Avoidance Agreement (DTAA) supported by a Tax Residency Certificate from the United Kingdom.

Issue 1: Taxability of salary income in India
The assessee, a non-resident Indian, received salary from IBM India Pvt. Ltd. while working in the United Kingdom. The income was not offered for taxation in India as the assessee was a tax resident in the UK and had paid taxes there. However, the Assessing Officer (AO) denied the claim due to the absence of a tax residency certificate from the UK. The assessee submitted the certificate before the Commissioner of Income Tax (Appeals) [CIT(A)], which confirmed the AO's decision. Upon review, the Appellate Tribunal noted the valid tax residency certificate from the UK, confirming the assessee's residency status during the relevant period. The Tribunal found the assessee eligible for DTAA benefit under Section 90 of the Act and deleted the addition of the salary income, allowing the appeal.

Issue 2: Consideration of evidence and remand report
The assessee submitted the tax residency certificate during the appellate proceedings, which was acknowledged in a remand report by the AO. The report confirmed the validity of the certificate and the assessee's eligibility for DTAA benefit. Despite this, the CIT(A) did not allow the ground of appeal initially. The Tribunal, after reviewing the evidence and the remand report, concluded that the assessee possessed a valid tax residency certificate for the relevant period, justifying the claim for DTAA benefit. The Tribunal set aside the CIT(A)'s finding and deleted the addition to the salary income, thereby allowing the appeal in favor of the assessee.

Conclusion:
The Appellate Tribunal allowed the appeal filed by the assessee, ruling in favor of the non-resident Indian's claim for DTAA benefit based on the valid tax residency certificate from the United Kingdom. The Tribunal held that since the assessee had offered the income for taxation in the UK, the salary income was not taxable in India, leading to the deletion of the addition made by the tax authorities.