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TMI Blog2020 (4) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... tax the salary income and the foreign allowance received by the assessee for services rendered outside India ignoring the Article 15(1) of India - Austria DTAA agreement and section 90 and section 5(2) of the Act. 3. Brief facts of the case are that the assessee, a non-resident individual, filed his return of income for the AY 2014-15 on 30/07/2014 admitting Nil income. Subsequently, the case was selected for scrutiny under CASS, Notices u/s 143(2) and 142(1) were issued to the assessee and finally assessment was completed on 09/09/2016 wherein the Ld.AO brought to tax the salary income and the foreign allowance received by the assessee for services rendered outside India. 4. During the course of scrutiny assessment on verification of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rendered outside India and shall not form part of total income under section 5(2) of the Income tax Act, 1961. Also, as the assessee qualifies as a tax resident of Austria, exemption under Article 15(1) of the India- Austria Double taxation Avoidance Agreement (DTAA) has been claimed in the return of income for the employment income. Based on the above, any salary income earned by a tax resident of Austria for services rendered in Austria is taxable only in Austria. In case services have been rendered in India the income for workdays spent in India is taxable in India. The Assessee wishes to submit that for the captioned AY, he was a tax resident of Austria and a non- resident in India. Hence, the salary received with respect to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has also failed to prove the. receipts that are reflecting in Form -16 are the salary receipts earned outside India within the purview of Article 15(1) of India-Austria DTAA. 5. Further the Employer in Form No. 16 has stated that the total TDS of Rs. 12,40,618/- was made on the gross salary i.e. Rs. 47,96,2111- received by assessee in India. The employer has not stated of paying any allowances outside India. 8. In view of the above, the Ld. AO held that the entire salary and allowance received by the assessee during the year under consideration is taxable in India and the exemption claimed by the assessee is to be disallowed. 9. Aggrieved by the order of Ld. AO, the assessee preferred an appeal before the CIT(A). However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source may be refunded. The ld. DR, on the other hand, relied on the orders of revenue authorities and argued in support of the same. 11. I have considered the rival submissions and carefully perused the material on record. From the Orders of the Ld. Revenue Authorities, I find that the Ld. AO has disallowed the exemption claimed by the assessee under Article 15(1) of the India-Austria DTAA only for want of Tax Residence Certificate (TRC) from Austria. The submission of the assessee in this regard was that despite best possible efforts he was not able to procure TRC from country of residence and the situation may be treated as "impossibility of performance". I find merits in the submission of the assessee. Normally it is a herculean task ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality is that as the things stand now, this provision cannot be construed as a limitation to the superiority of treaty over the domestic law. It can only be pressed into service as a provision beneficial to the assessee.....". Therefore, the stand of the Ld. Revenue Authorities on this issue is devoid of merits. 12. As per Article 15(1) of the India-Austria DTAA, "salaries, wages and other similar remuneration derived by a resident of a contracting state in respect of an employment shall be taxable only in that state unless the employment is exercised in the other contracting state. If the employment is so exercised, such remuneration as is derived therefore may be taxed in that other state." Further, Article 4(1) the India-Austria DTAA de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee is a NRI and the salary income received by him in India for employment exercised in UK has been offered by him for taxation in UK in pursuance of Article 16 of DTAA with UK. Hence, the salary received by the assessee was not taxable in India in pursuance of DTAA between India and UK. 16. In the case of DIT Vs. Prahlad Vijendra Rao (239 CTR 107), on which reliance placed by the assessee, the Hon'ble Karnataka High Court held that under section 15 of the Act even on accrual basis salary income is taxable i.e. it becomes taxable irrespective of the fact whether it is actually received or not; only when services are rendered in India it becomes taxable by implication. However, if services are rendered outside India such income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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