2016 (12) TMI 876 - HC - Income Tax

Revision u/s 264 against the assessment order cum intimation under Section 143(1) - revision in favor of assessee - petitioner working as a marine engineer filed income tax return for such assessment year under the residential status as non-residential Indian and had applied under Section 264 - Held that - The impugned order is one under Section 264 of the Act of 1961. The power under Section 264 is wide enough to grant appropriate relief to an assessee. In the impugned order the Commissioner notes that the income received by the petitioner is in respect of services rendered for 286 days outside India. The Commissioner exercising powers under Section 264 of the Act of 1961 could have proceeded to grant appropriate relief to the petitioner by setting aside the intimation under Section 143(1) of the Act of 1961 and holding that such income of the petitioner is not taxable in respect of the relevant assessment year. The Commissioner however did not do so. It has remanded the matter to the assessing officer to do the needful. In view of the discussions above therefore the intimation under Section 143(1) of the Act of 1961 dated December 7 2012 as well as the order under Section 264 dated September 25 2013 are set aside.

Summary

Issues:
Assessment under Section 264 of the Income Tax Act, 1961.

Analysis:
The petitioner, a marine engineer, filed an income tax return as a non-resident Indian for the assessment year 2011-2012, disclosing a remuneration received from a foreign company. The petitioner did not appeal an assessment order under Section 143(1) and applied under Section 264, claiming exemption based on previous court decisions. The department argued that the order was appealable under Section 246A and the petitioner should have pursued that route instead. The court considered the petitioner's claim that the income was exempt from tax due to being earned outside India for 286 days, citing relevant legal interpretations and guidelines.

The court analyzed Section 5 of the Income Tax Act, which governs the total income of non-resident individuals. The petitioner's income, earned for services rendered outside India, falls under Section 5(2) of the Act. Legal precedents were cited to determine that the place where services were rendered is crucial in establishing where income accrued. The court found that the petitioner's income, received for work done outside India, should be treated as income received outside India.

Regarding the discrepancy in the income amount claimed by the petitioner, the court accepted the higher figure of income received during the assessment year. Legal references were made to support the wide powers of the Commissioner under Section 264 to grant relief to taxpayers. Circulars and court decisions emphasized the duty of income tax officers to assist taxpayers in claiming reliefs they are entitled to.

The court set aside the intimation under Section 143(1) and the order under Section 264, noting that the income received by the petitioner for services outside India should not be taxable for the relevant assessment year. The Commissioner was deemed to have the authority to grant relief to the petitioner but had remanded the matter back to the assessing officer, prompting the court to intervene and provide a final decision on the matter.

In conclusion, the court disposed of the case, setting aside the previous orders and ruling that the income earned by the petitioner for services rendered outside India should not be subject to tax for the assessment year in question.