2024 (9) TMI 725 - AT - Income Tax

Addition of exempt salary income - salary income earned in UAE - assessee s stay in UAE during the relevant assessment year, his employment and salary drawn - Addition under the head salary income of the assessee stating the corresponding credit in his bank account was not established for having received the salary outside India - assessee was Non-resident and was employed in UAE during the relevant assessment year under consideration - HELD THAT - We note that the assessee was a Non- Resident employed at UAE and earned salary income from AL Kayed Workshop. During the relevant assessment year, the assessee had stayed in India only for 20 days. The assessee has earned salary at UAE and in support of that salary certificate issued by the employer along with the eligible emoluments of salary for the period from 01.04.2016 to 31.07.2017 (A.Y 2017-18) was furnished before the Ld. CIT(A), which has been accepted by the Ld. CIT(A). The assessee had submitted general ledger account of assessee maintained by the company wherein the amounts credited as eligible salary on regular basis along with amounts withdrawn from time to time for his personal use/investments. The assessee has proved that the amount has been earned from the company at outside India which has been supported by the proof of employment at UAE, salary certificate, ledger account of salary drawn duly certified by the company - no interference needed for the decision made by the Ld. CIT(A) and hence, we dismiss the appeal of the Revenue.

Summary

Issues Involved:
1. Whether the cash withdrawal from the employer company's current account towards incentive, bonus, and extra time remuneration forms part of the salary and is exempt under the head "income from salary."
2. The correctness of the short-term capital loss claimed by the assessee.

Issue-wise Detailed Analysis:

1. Cash Withdrawal as Part of Salary:
The primary issue was whether the cash withdrawal from the employer company's current account towards incentive, bonus, and extra time remuneration should be considered part of the salary and thus exempt under the head "income from salary." The Revenue contended that the CIT(A) erred in holding that the cash withdrawal formed part of the salary, as there was no direct evidence supporting the claim. The Revenue argued that only Rs. 31,57,404/- was credited as salary in the assessee's bank account, and the remaining amount of Rs. 2,66,37,601/- was unsupported by direct evidence.

The assessee, a non-resident during the financial year 2016-17, claimed that the salary earned abroad, amounting to Rs. 2.97 crores, was exempt. The CIT(A) accepted this claim, noting that the assessee had provided sufficient documentary evidence, including a salary certificate from the employer and general ledger details, to support the claim. The CIT(A) concluded that the entire amount was earned, accrued, and received outside India, and thus, not taxable in India.

The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee had proved the earnings from the company outside India with adequate documentary evidence. The Tribunal found no need to interfere with the CIT(A)'s conclusion, thereby dismissing the Revenue's appeal.

2. Short-term Capital Loss:
The second issue was related to the short-term capital loss claimed by the assessee. The AO disallowed the claim of short-term capital loss of Rs. 1,77,00,000/-, stating that the cost of furniture, fixtures, and interiors included in the cost of acquisition of the property was not supported by the purchase deed. The AO computed the short-term capital loss at Rs. 15,66,060/- instead.

The Tribunal did not specifically address this issue in the final judgment, as the primary focus was on the salary income exemption. However, the disallowance of the short-term capital loss by the AO was implicitly upheld, as there was no mention of any reversal of this decision.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that the cash withdrawals towards incentive, bonus, and extra time remuneration formed part of the salary and were exempt from income tax in India. The Tribunal found that the assessee had provided sufficient documentary evidence to support the claim of exempt salary income earned abroad. The short-term capital loss disallowance by the AO was implicitly upheld, as it was not specifically contested in the final judgment.