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TMI Blog2012 (7) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... g funds were transferred to the assessee's Indian bank account by TTs - as DTAA overrides Indian Income-tax laws therefore, in view of Article 7 the profits of an enterprise of a contracting State shall be taxed only in that State except where the enterprise has a permanent establishment in other contracting States - decided in favour of assessee. Addition being 25% of the jewellery as unexplained in the hands of the assessee - gifts of jewellery made by the assessee to relatives - Held that:- Even if the assessee has spent some funds in gifting gold jewellery to his family members, those funds emanated from non taxable funds available in his bank account. It does not belong to any income liable for taxation in India. Therefore, even if the proposition of the CIT(A) is accepted, there is no justification for making any addition in the hands of the assessee - in favour of assessee. - IT APPEAL NOS. 532 TO 537 (MDS.) OF 2012 - - - Dated:- 22-6-2012 - O.K. NARAYANAN, VIKAS AWASTHY, JJ. ORDER Dr. O.K. Narayanan, Vice-President This is a bunch of six appeals and one cross objection. All the six appeals are filed by the Revenue for the six assessment years from 2004-05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as income received or deemed to be received or accrued or arose or deemed to be accrued or arose in India. He, therefore, held that even if the assessee is a nonresident, the remittances are liable for taxation in India. 7. The assessee filed detailed replies to the propositions mooted by the assessing authority. He argued before the Assessing Officer that he has no business connection in India; he does not carry on any business in India with any person; he does not have any place of business in India; he is a non-resident of India and therefore, in such circumstances the remittances cannot be treated as taxable income in the hands of the assessee only for the reason that brokerage and commission are remitted in assessee's Indian bank account. He argued that the brokerage and commission have already been received outside India and remittances to his Indian bank account are made thereafter and, therefore, there is no reason to hold that the remittances were in the nature of income accrued or arose or received or so deemed, in India. The assessee also relied on the judgment of the Hon'ble Supreme Court rendered in the case of CIT v. Ogale Glass works Ltd. (25 ITR 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TTs are also in the same category of demand drafts and cheques and, therefore, remittances covered by TTs cannot be treated differently and those remittances should also be treated as having been received by the assessee outside India. The TTs are first received by correspondent bank for South India Bank in New York. That bank is HSBC Bank. It is thereafter the correspondent bank which transfers the amounts in dollars to the assessee's account in India. He held that the argument of the assessee that TTs are also in the same category is correct. He accepted the contentions for all the assessment years from 2004-05 to 2008-09 and held that remittances covered by TTs are not taxable in India. 13. In respect of assessment year 2009-10, the Commissioner of Income-tax (Appeals) had to examine the residential status of the assessee. The Assessing Officer has treated the assessee as non resident on the ground that the assessee stayed in India during the previous year relevant to the assessment year 2009-10. The Commissioner of Income-tax (Appeals) accepted the contention of the assessee that even if the assessee was residing in India for the assessment year 2009-10, by virtue of his e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Therefore, by virtue of the operations carried on by the assessee, his income cannot be treated as income received or accrued or arose or deemed so, in India. 17. The case of the Revenue is built up on the point where the assessee was paid his brokerage and commission. In the case of cheques and demand drafts, the Assessing Officer himself has accepted the contentions of the assessee that they were received outside India and on realization of those instruments, the proceeds were remitted to assessee's Indian bank account. These transactions were carried out by the correspondent bank of South Indian Bank with which the assessee has an account in India at Chennai. The correspondent bank of South Indian Bank in New York is HSBC Bank. In London, the correspondent bank is HSBC Bank. In Germany, the correspondent banks are Commerzbank AG and Standard Chartered Bank (Germany) GMBH. In Japan, the correspondent bank is Hongkong Shanghai Banking Corp., CPO. In Canada, the correspondent bank is The Bank of Nova Scotia. In Zurich, the correspondent bank is UBS AGP. In Australia, the correspondent bank is again HSBC Bank and in Dubai, it is Bank of Baroda. 18. Now, the dispute is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has placed reliance on the decision of the Authority of Advance Rulings rendered in the case of SKF Boilers Driers (P) Ltd. reported in 68 DTR (AAR) 106. In that case, the Indian character of the income was determined by the authority on the basis of situs of the right to receive the income. The authority held that even though the agents have rendered services abroad and the commission has also remitted abroad, the income becomes Indian income on the ground that the right to receive the income arose in India. We are of the view that the above decision of the authority does not have any factual relation to the present case. In this case, the right to receive the brokerage and commission always remained outside India and what was received by the assessee in his Indian bank account is a subsequent remittance of funds from foreign accounts to Indian accounts. As far as the assessee is concerned, the right to receive the income did not arise in India. Therefore, we find that the above judgment relied on by the Revenue is not applicable to the present case. 20. Incidentally, it is also to be mentioned that the learned counsel appearing for the assessee, has relied on the Double ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussing the issue of unexplained jewellery in a detailed manner, the Commissioner of Income-tax (Appeals) has clearly held that the Assessing Officer has not taken into account various explanations relating to gifts and sridhan received by those persons. Ultimately, the Commissioner of Income-tax (Appeals) also held that the differences in different individual hands, if not explained, has to be assessed only in their hands. It is after coming to such categorical findings, that the Commissioner of Income-tax (Appeals) makes a presumption that the assessee might have gifted some jewellery to those individuals and to that extent, assessee must be accountable for the funds utilized for the acquisition of jewellery. Even if such case is visualized, we are of the view that the addition cannot be made in the hands of the assessee. While dealing with the brokerage and commission income of the assessee, we have already held that the assessee does not earn any income in Indian taxable territory. We have also held that he is a non resident. He is employed in Singapore. The import and export transactions out of which he earned additional income are again carried out outside Indian territory. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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