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TMI Blog2018 (8) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2016 against the order passed by the ACIT(IT), Circle-1(1), Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short "the Act") dated 28.03.2016 for the Assessment Year 2013-14. This appeal by the Revenue in I.T.A. No. 425/Kol/2017 arises out of the order of the Learned Commissioner of Income Tax(Appeals)-22, Kolkata [in short the ld CIT(A)] in Appeal No. 19/CIT(A)-22/Kol/13-14/16-17 dated 21.12.2016 against the order passed by the DCIT(IT), Circle-2(1), Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short "the Act") dated 26.03.2016 for the Assessment Year 2013-14. Since the identical issue involved in these appeals, they are taken up together and disposed off by this common order for the sake of convenience. 2. The facts of Shri Sudipta Maity (ITA No. 428/Kol/2017) are taken up for adjudication as per the consent of both the parties before us. The decision rendered thereon would apply with equal force for other assessees involved in these appeals except with variance in figures and page numbers of the paper book. 3. The only issue to be decided in this appeal is as to whether the ld CITA was justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dential status as well as the tax residency of the assessee was not known. 4.2. The assessee vide letter dated 21.12.2015 elaborated the modality of payment of Foreign Assignment Allowance by IBM as under:- "We would submit before your goodself that the foreign assignment allowance was paid by IMB India Private Limited, employer of the captioned assessee, to the International Travel Card outside India (copy of travel card statement enclosed as Annexure 3). The said card is denominated in foreign currency only and can be used only outside India. Once an employee is sent on foreign assignment, a travel currency card is issued to the employee by Axis Bank Limited. Upon instructions from IBM, Axis Bank pays the amount of foreign assignment allowance to the international travel card of the employee outside India through its Nostro account situated outside India. A nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro Accounts are used to facilitate settlement of foreign exchange and trade transactions. A Nostro Account is always maintained outside India and denominated in Foreign Currency. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the revenue is in appeal before us. 6. The ld DR argued that the monies were received by the assessee only pursuant to employer -employee relationship and out of employment contract which is entered in India and is also enforceable in Indian courts. He argued that TCC was issued by Axis Bank, which is a prepaid card and can be loaded / reloaded in foreign currency. The Axis Bank TCC is available in US, Australian, Canadian and Singapore Dollars, Euros, Sterling Pounds, Swiss Francs and Swedish Kroner Currency on VISA platform . The US dollars, Sterling Pounds, Euros, Dirhams and Saudi Riyals variants are also available on MASTERCARD platform. One can use the travel card in any country where VISA / MASTERCARD has acceptance. An individual does not need an account relationship with Axis Bank branch or the office of select full-fledged money changers (FFMC) and purchase an Axis Bank TCC as he can simply walk into any Axis Bank branch or the office of select FFMC and purchase an Axis Bank TCC over the counter. At the time of purchase of such a card for amounts exceeding $5000 , the purchaser has to mandatorily submit a copy of passport, copy of Visa issued by the country of travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oosely called Axis TCC. d) Axis Bank has maintained a Nostro Account with its Correspondent Banker (Zuercher Kantonal Bank, Zurich). e) IBM transfers funds from its EEFC Account from Deutsche Bank to the Nostro Account of Axis Bank (i.e Zuercher Kantonal Bank) for the purpose of loading / reloading the Axis TCC issued to the assessee who is sent on foreign assignment. f) The employee who is sent on foreign assignment uses the said funds outside India out of monies topped up or credited in his Axis TCC. Hence it could be safely concluded that the first point of receipt for the assessee happens outside India. This money is used by him for his sustenance in Switzerland. Both the accrual and receipt of income happens outside India. Hence the same is outside the ambit of tax as per the provisions of section 5(2) of the Act. The services of the assessee are also utilized only outside India. g) This foreign assignment allowance is duly subjected to tax in the country of Switzerland and the assessee had duly paid the said tax to the Swiss Government. h) The assessee had paid taxes in India in respect of salary received by him in India, which is not in dispute. 7.2. We find that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2007-08. The appellant received foreign allowances of Rs. 17,27,360/- outside India for the services rendered in Netherlands. As the appellant, qualified as a non-resident during the relevant assessment year and foreign allowances received by the appellant is not liable to tax U/s 5(2) of the Act. The appellant had disclosed total income of Rs. 3,27,910/- excluding the foreign allowances and against this income, the tax of Rs. 48,790/- was paid by the appellant. The employer deducted TDS wrongly at Rs. 6,36,484.65 and appellant also paid self assessment tax at Rs. 4,653/- on account of his interest income from bank deposits. Therefore, the appellant had claimed refund of Rs. 5,92,305/- by filing the return. The learned Assessing Officer submitted that the amount of Rs. 17,27,360/- was received by the appellant in Netherlands from his employment on account of foreign allowances, for which he produced certificate from the employer. The employer was non-resident during the year and provisions of Section 6(1) of the Act is applicable. Therefore, foreign allowances received by him outside the India for services rendered outside India are not liable to be taxed in India U/s 5(2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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