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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 ..... 428/Kol/2017, I.T.A No. 416/Kol/2017, I.T.A No. 425/Kol/2017 - - - Dated:- 11-7-2018 - Hon ble Shri S.S. Godara, JM Shri M.Balaganesh, AM For the Department- Shri N. B. Som, Addl. CIT (DR) For the Assessee- Shri Nageswar Rao, Advocate, Shri Navin Jain, CA ORDER Per M. Balaganesh, AM 1. This appeal by the Revenue in I.T.A. No. 428/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. 27/CIT(A)-22/Kol/13-14/16-17 dated 28.12.2016 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 28.03.2016 for the Assessment Year 2013-14. This appeal by the Revenue in I.T.A. No. 416/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. 43/CIT(A)-22/Kol/13-14/16-17 dated 21.12.2016 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for services rendered outside India . The assessee pleaded that the entire foreign allowance of ₹ 51,84,489/- was not offered to tax in India as the same was received by the assessee outside India for the services rendered outside India which does not form part of the total income u/s 5(2) of the Act. The assessee however offered the entire salary received in India of ₹ 6,77,128/- to tax in India. In the course of assessment proceedings, the assessee submitted a letter dated 24.9.2015 with regard to exemption claimed by him towards foreign assignment allowance, which was paid by crediting the assessee s Travel Currency Card (TCC) . The assessee also furnished a certificate from IBM India Private Limited stating that the assessee had received ₹ 51,84,489/- outside India for rendering services in Switzerland. In the said certificate, it was also mentioned by IBM that taxes to the tune of ₹ 16,04,063/- was deducted at source including on the portion of foreign assignment allowance because the residential 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 Fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) IBM maintains an Exchange Earners Foreign Currency (EEFC) Account with Deutsche Bank , Bangalore. c) From the EEFC Account of Deutsche Bank, funds are transferred to the Nostro Account of Axis Bank maintained outside India. d) Upon instruction from IBM, the funds are then trasnfered from the Nostro Account of Axis Bank maintained outside India to the Axis TCC of the respective employee. 4.4. The ld AO however did not heed to the contentions of the assessee and held that the foreign assignment allowance was received by the assessee pursuant to the employment contract entered in India ; that the first point of receipt of the same happens in India and thereafter monies get transferred by way of credit to TCC issued to the assessee through the Nostro Account of Axis Bank. Therefore, the said receipt is taxable in India as per section 5(2) of the Act and accordingly denied the claim of exemption of the assessee in the sum of ₹ 51,84,489/-. 5. The ld CITA deleted the addition and granted relief to the assessee. Aggrieved, 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 relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Axis Bank TCC for the period 30.11.1999 to 14.12.2015 enclosed in apges 130 to 145 of paper book. d) List of various Nostro Accounts held by Axis Bank in various countries , out of this list, the relevant Nostro Account from where payments were made to assessee herein is Zurcher Kantonal Bank (ZKB) from Account Number 0700-00037.370 enclosed in Page 146 of paper book. e) Sample instructions given by IBM India Private Limited authorizing the Axis Bank, Bangalore to load currencies to the TCC of assessee - enclosed in pages 147 to 148 of paper book. 7.1. From the facts narrated above and on hearing the learned counsels of assessee as well as for the revenue, we find that:- a) The assessee is a non-resident individual and had rendered services outside India for which he has received foreign assignment allowance. b) IBM maintains money in foreign currency in its EEFC account maintained with Deutsche Bank, Bangalore. c) IBM instructs Axis Bank to issue Travel Currency Card to its employees who are sent on foreign assignment, which is loosely called Axis TCC. d) Axis Bank has maintained a Nostro Account with its Correspondent Banker (Zuercher Kantonal Bank, Zur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2 For the removal of doubts, it is herby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India. 7.4. We find that the reliance placed by the ld AR on the Co-ordinate Bench decision of Jaipur Tribunal in the case of ADIT (International Taxation) vs Sri Kartik Vyas in ITA No. 375/JP/2012 dated 31.12.2014 is directly on this point which was rendered in the context of an IBM employee under similar circumstances. It was held as under:- 5. At the outset, the learned AR for the assessee reiterated the submissions made before the ld. CIT(A) and submitted that the appellant is an employee of IBM India Pvt. Ltd., was sent on an International assignment to Netherlands during the previous year 2007-08. The appellant received foreign allowances of ₹ 17,27,360/- outside India for the services rendered in Netherlands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur Tribunal decision is factually distinguishable with the facts before the Chennai Tribunal. Hence the reliance placed on the decision of Chennai Tribunal supra does not come to the rescue of the assessee herein. 7.6. We also find that the Hon ble Karnataka High Court in the case of DIT (International Taxation) vs Prahlad Vijendra Rao reported in 198 Taxman 551 (Kar) and Hon ble Bombay High Court in the case of CIT vs Avtar Singh Wadhwan reported in 247 ITR 260 (Bom) had held that in the case of a non-resident, when services are rendered outside India , the accrual of income thereon happens outside India and hence the same cannot be brought to tax in India as per section 5(2) of the Act. As stated above, we find that the assessee was able to get control over the funds in his TCC for the first time only in Switzerland and not in India and first point of receipt also happens only in Switzerland. Hence it could be safely concluded that both accrual and receipt of funds happens outside India thereby making the said receipt to stay outside the ambit of taxability u/s 5(2) of the Act. 7.7. We also find that identical claim of exemption of the assessee was allowed by the ld AO fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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