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TMI Blog2014 (12) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... rency travel card which could be used only outside India. Held that:- The appellant was non-resident during the year under consideration and allowances were received by him in Netherlands. - The employer wrongly deducted TDS, the appellant had claimed refund on it. The Indian income has been considered by the appellant as taxable but the allowances paid outside the India are not taxable U/s 5(2) of the Act in the case of non-resident - Decided against the revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... re to form No. 16 further showed that the assessee had been allowed income grossed up for tax amounting to ₹ 5,84,263/-. The amounts had been credited to the account of the assessee in India and tax has been deducted on the same. The assessee had apparently been reimbursed by the employer the amount of tax payable by him which amounting to ₹ 5,84,263/-. The assessee in the return of income had claimed an amount of ₹ 17,27,360/- on account of foreign allowances which included this amount of gross up for tax also. Therefore, the assessee had claimed refund of ₹ 5,47,700/-. Thus, the tax liability borne by the employer was being redeemed by the assessee in India. The Assessing Officer's tax liability borne by the emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinion that annexure to Form No. 16 further showed that the assessee had been allowed income grossed up for tax amounting to ₹ 5,84,263/-. The assessee had apparently been reimbursed by the employer the amount of tax payable by him which amounted to ₹ 5,84,263/-. The assessee had shown in his income tax return an amount of ₹ 17,27,360/- on account of foreign allowances which included this amount of grossing up for tax also.. Therefore, the assessee had claimed a refund of ₹ 5,87,700/-. The learned Assessing Officer applied provisions of Section 5(2) of the Act. After considering the assessee's reply, it has been held by the learned CIT(A) that the appellant was a non-resident as per Section 6(1) of the Act, only h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese sections cannot be applied to a non-resident and that too for an income accruing outside India. He relied upon the decision of the Hon'ble Karnataka High Court in the case of Director of Income Tax (International Taxation) and Anr. Vs. Prahlad Vijendra Rao (239 CTR 107) and British Gas India (P) Ltd., In Revenue, (287 ITR 462). 3.1 Learned CIT(A) further held as under: "Further as per Double Taxation Avoidance Agreement (DTAA) entered into between India and Netherlands for the purpose of determining that which country shall be eligible to tax the income of appellant which was derived for the period of his assignment in Netherlands, the relevant articles 15 of the agreement stated that subject to the provisions of Articles 16, 18, 19, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant had also filed certificate to this effect from the employer i.e. M/s IBM India Pvt. Ltd. Further the appellant had declared receipts of 58,578 Euros received in Netherlands in calendar year 2007 as taxable and taxes of 24,155 Euros were also paid. In the calendar year 2008, the appellant had declared receipts of 64,359 Euros received in Netherlands as taxable and taxes of 27,727 Euros were also paid. Since the appellant had paid taxes on his receipts including foreign allowances in Netherlands, the A.O. could not have taxed the same income twice. The fact that the employer had inadvertently deducted TDS on foreign allowances and the same was offered to tax in the original return of income, will not empower the A.O. to tax the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from bank deposits. Therefore, the appellant had claimed refund of ₹ 5,92,305/- by filing the return. The learned Assessing Officer submitted that the amount of ₹ 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 the Act. He also relied on the various case laws, which were relied upon before the learned CIT(A), therefore, he prayed to confirm the order of the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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