9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (4) TMI 16 - AT - Income TaxRectification u/s 154 - taxation of salary income earned in USA - global income for tax in India - debatable issue or not? - Scope of beneficial provisions of Article 4(2) of India USA Treaty - income received outside India from J.P. Morgna USA - assessee submitted that the issue raised by the AO is a debatable issue which cannot be rectified - HELD THAT - AO has rectified the order passed u/s 143(3) and added salary income received in USA from J.P. Morgan and the assessee has claimed relief in his computation of income. The assessee also claimed foreign tax credit without offering global income. The assessee reiterated the submission made before the lower authorities and he also relied on the various judgments noted supra. We note that the case law relied by the assessee will not support the arguments since here there is factual position that in Indian Income-tax return i.e ITR 2 Schedule FSI which is placed at page No.15 the assessee has not offered the salary received from JP Morgan USA and he has offered under the head other sources of income of Rs. 12, 64, 665/- and has claimed tax paid outside India of Rs. 4, 15, 267/- and he also accepted that he is a resident/ordinary resident of India as per sec. 5(1)(c) of the Act and he is liable to tax in India on his global income which was not shown in the Income-tax return filed by the assessee in India therefore there is factual mistake done by the assessee himself and therefore it is not a debatable issue. Accordingly AO has correctly invoked sec. 154 of the Act and rectified the order passed us/ 143(3) of the Act. Assessee has claimed relief under Article 16 of the Indo- USA DTAA (Treaty) r.w.s 90 of the Act on the salary received and the CIT(A) has accepted the arguments put forth before him and CIT(A) has given direction to the AO noted Supra. We also direct the AO to follow the direction of the CIT(A) and to pass OGE (Order Giving Effect) within 6 months from the receipt of this order considering the eligibility of the assessee as per DTAA provisions. The assessee is directed to file necessary documents for support of his case. Accordingly this issue is partly allowed for statistical purposes.
Issues involved: The judgment involves various issues including the validity of order under section 154, determination of tax residency status, grant of foreign tax credit, application of tax treaty provisions, violation of statutory provisions, and imposition of interest under sections 234A, 234B, and 234C of the Act.
Validity of Order under Section 154: The appeal was filed against the order passed by NFAC, New Delhi, challenging the issuance of order under section 154 despite no apparent mistake in the assessment order under section 143(3) of the Act. The Appellate Tribunal held that the global income received by the assessee should be taxed in India as per the provisions of the Act and the India-USA treaty. The Tribunal found that the AO correctly rectified the order under section 154, as the income from USA was not doubly taxed and foreign tax credit was allowed. The Tribunal concluded that the AO's invocation of section 154 was valid, as there was a mistake apparent from the record. Tax Residency Status and Taxation of Salary Income: The issue of tax residency status arose concerning the appellant's income earned in India and the USA. The AO determined that the appellant, being a resident of India, should offer global income for taxation in India, including the salary received from the USA. The Tribunal upheld the AO's decision, stating that the appellant's global income was taxable in India, subject to relief under the India-USA treaty. The Tribunal also noted the appellant's failure to offer the salary income from the USA, leading to the invocation of section 154 for rectification. Grant of Foreign Tax Credit and Application of Tax Treaty Provisions: The appellant claimed foreign tax credit under Article 25 of the India-USA treaty for taxes paid in the USA on interest and dividend income. The Tribunal found that the AO correctly allowed foreign tax credit and applied the treaty provisions to avoid double taxation. The Tribunal directed the AO to consider the eligibility of the assessee for relief under the treaty provisions and to pass an Order Giving Effect accordingly. Violation of Statutory Provisions and Imposition of Interest: The Tribunal addressed the issue of violation of statutory provisions by the CIT(A) and AO in not granting foreign tax credit and beneficial tax rates as per the India-USA treaty. The Tribunal noted the imposition of interest under sections 234A, 234B, and 234C of the Act. The appellant's appeal was partly allowed for statistical purposes, emphasizing the importance of complying with statutory provisions and treaty obligations. Conclusion: The Appellate Tribunal upheld the AO's decision to tax the appellant's global income in India, granted foreign tax credit as per the treaty provisions, and directed compliance with statutory requirements. The judgment highlighted the significance of accurately declaring and offering income for taxation, especially concerning international income and tax treaty provisions.
|
