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2023 (11) TMI 853 - AT - Income TaxDenial of tax credits - Salary not taxable in India - Residential status of an assessee - assessee was not able to obtain Tax Residency Certificate from the department of Treasury, USA, certifying that the assessee was taxed in U.S . - assessee has filed an application for admission of additional documents and Tax Residency Certificates - HELD THAT - In our view, the law is fairly settled that a party who had failed to produce the evidences despite his best efforts at the assessment / appellate stage and such evidence are necessary for just and fair disposal of the proceedings, then those documents are required to be admitted. The above said principle has been duly incorporated in Rule 29 of the ITAT Rules. Having admitted the documents filed by the assessee which are in the nature of additional documents which show that the assessee was tax resident in USA during the relevant assessment year. Accordingly, we remand back the matter to the file of Assessing Officer with a direction to consider the Tax Residence Certificate and decide the issue afresh and pass a reasoned speaking order after affording of opportunities of hearing to the assessee in accordance with law. Appeal of assessee is allowed for statistical purposes.
Issues involved:
The issues involved in the judgment are: 1. Taxability of salary income earned outside India for a non-resident individual. 2. Requirement of Tax Residency Certificate (TRC) for claiming benefits under Double Taxation Avoidance Agreement (DTAA). 3. Grant of credit for taxes paid in the USA. 4. Jurisdiction of the assessing officer. Taxability of Salary Income: The appeal was filed by the assessee against the order of the Income Tax Officer invoking proceedings under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 for the A.Y. 2020-21. The assessee contended that the salary received in India, out of which a portion was earned in the USA, should not be taxable in India as per the provisions of the ITA, 1961. The lower IT authorities failed to consider various judicial precedents and the non-resident status of the appellant for the relevant assessment year. The appellant argued that once the income is not taxable under the ITA, 1961, there is no need to refer to DTAA. Requirement of Tax Residency Certificate (TRC): The lower IT authorities insisted on the mandatory requirement of TRC for claiming DTAA benefits between India and the USA. The DRP upheld this requirement stating that TRC is proof of residence and is essential to avoid double taxation. The Assessing Officer disallowed the claim of exemption under DTAA as the appellant failed to submit the TRC, as mandated under sec.90(4) of the IT Act, 1961. The Tribunal admitted additional documents submitted by the appellant, including Tax Residency Certificates for the relevant years, and remanded the matter back to the Assessing Officer for fresh consideration. Grant of Credit for Taxes Paid in the USA: The appellant argued that the denial of tax credits was based on the inability to obtain a Tax Residency Certificate from the USA Treasury. The appellant later submitted Tax Residency Certificates for the relevant years, issued by the U.S.A. Treasury, to prove tax residency in the USA. The Tribunal admitted these additional documents and directed the Assessing Officer to consider the TRC and decide the issue afresh. Jurisdiction of the Appellant: The appellant contended that the jurisdiction assumed by the Income Tax Officer in Hyderabad was incorrect as the appellant had been staying in Pune for many years. The Tribunal allowed the appeal for statistical purposes and directed the Assessing Officer to reconsider the TRC and decide the matter after affording the appellant an opportunity to be heard. This summary provides a detailed overview of the judgment, highlighting the key issues addressed and the decisions made by the authorities involved.
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