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2020 (5) TMI 77 - AT - Income TaxIncome accrued in India - salary received by the assessee from Australia entity - India-Australia DTAA - taxability of salary received for the period 31.08.2014 to 31.03.2015 in India in respect of services rendered by him in Australia - HELD THAT - From the reading of aforesaid provisions of Section 15(a) of the Act, it could be concluded that the salary is always taxable on accrual basis. Even as per Provisions of Section 9(1)(ii) which states that income deemed to accrue or arise in India, salary income could be deemed to accrue or arise in India, only if it is earned in India in respect of services rendered in India. Provisions of Section 9(1)(ii) of the Act read with Explanation to clause(a) is very clear in this regard. We find the assessee had claimed exemption under Article 15(1) of India-Australia DTAA for claiming the salary income received for the period 31.08.2014 to 31.03.2015 as not taxable in India. In the instant case as narrated above, there is absolutely no dispute that assessee herein is a resident of Australia and non-resident of India during the year under consideration. Hence, assessee would be entitled to India-Australia Treaty wherein as per Article-15, salary income of resident of Australia is taxable only in Australia. Accordingly we hold that the salary earned by the assessee in respect of services rendered in Australia for the period 31.08.2014 to 31.03.2015 is taxable only in Australia (this is also duly offered to tax by the assessee in Australia as evident from Australian Tax return filed by the assessee) and not in India. - Decided in favour of assessee.
Issues:
1. Determination of assessed income and non-issuance of refund. 2. Applicability of Article 15(1) of India-Australia DTAA on taxing salary income. 3. Taxability of salary based on accrual vs. receipt. 4. Invocation of provisions of India-Australia DTAA for double taxation elimination. 5. Taxability of salary received in India for services rendered in Australia. Issue 1: Determination of assessed income and non-issuance of refund: The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2015-16. The appellant challenged the determination of assessed income and non-issuance of refund amounting to INR 1,224,183. The grounds raised were dismissed by the CIT(A)-16, leading to no relief being granted. Issue 2: Applicability of Article 15(1) of India-Australia DTAA on taxing salary income: The main issue revolved around whether the salary received by the assessee from an Australian entity could be taxed in India. The assessee argued for the applicability of Article 15(1) of the India-Australia DTAA, claiming that the salary earned in Australia should not be taxable in India. The Tribunal analyzed the provisions of the treaty and concluded that the salary income of a resident of Australia is taxable only in Australia, not in India. Issue 3: Taxability of salary based on accrual vs. receipt: The Tribunal examined the taxability of the salary received by the assessee in India for services rendered in Australia. Despite the salary being received in India, the Tribunal held that under the Income-tax Act, salary earned for services in Australia should be taxable only in Australia, as per the provisions of Section 5(2)(a) and Section 15 of the Act. Issue 4: Invocation of provisions of India-Australia DTAA for double taxation elimination: The Tribunal addressed the invocation of specific clauses of the India-Australia DTAA for the elimination of double taxation. It was emphasized that the treaty benefit shall apply to residents of both India and Australia. The decision highlighted that the assessee, being a resident of Australia and non-resident of India, was entitled to the treaty benefits under Article 15 of the DTAA. Issue 5: Taxability of salary received in India for services rendered in Australia: The Tribunal considered the factual background where the assessee was employed in Australia but received salary in India. By analyzing the provisions of the India-Australia DTAA and relevant sections of the Income-tax Act, the Tribunal concluded that the salary earned for services in Australia should be taxed only in Australia, as the assessee was a resident of Australia during the relevant period. In conclusion, the Tribunal allowed the appeal of the assessee based on the detailed analysis of the treaty provisions, relevant sections of the Income-tax Act, and judicial precedents supporting the non-taxability of the salary in India for services rendered in Australia by a resident of Australia.
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