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TMI Blog2020 (8) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... is preceded and succeeded by service rendered in India - If we keep the facts of the present case in juxtaposition to the conditions enshrined in section 9(ii), it can be seen that the salary income earned by the non resident individuals were for the services rendered out side India and not in India. Therefore, such salary income cannot be deemed to have accrued or arisen in India as per section 9(ii) of the Act. The Assessing Officer in his anxiety to bring the salary income to tax in India has completely overlooked the impact of section 9(1)(ii) of the Act. The attempt on the part of the Assessing Officer to rope in the reimbursement of salary payment under section 9(1)(i) of the Act is completely misconceived. Having held so, taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en disposed off by the Tribunal. Finding the aforesaid claim/contention of the Revenue to be correct, the Tribunal, vide order dated 22nd February 2019, in M.A. no.451/ Mum./2018, recalled the earlier order for the specific purpose of disposing off grounds no.4 and 5. This is how the present appeal has come up for hearing before us. 3. The issue raised in grounds no.4 and 5, pertains to deletion of disallowance of ₹ 1,46,79,148, under section 40(a)(iii) of the Act. 4. Brief facts are, the assessee having the status of AoP (Association of Persons) was formed as a joint venture by five companies viz. L T Ltd., IRCON, Shimizu Corporation, M/s. Samsung Corporation and Dywidag for executing the contract of construction of Metrol R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee specifically referred to the provisions contained under section 9(1)(ii) of the Act. Further, to substantiate its claim, the assessee submitted copy of the debit notes and time sheets. Without prejudice, the assessee further submitted that even as per the provisions of respective Double Tax Avoidance Agreement (DTAA) between India Japan and India South Korea, salaries, wages and other remunerations received by a resident of Japan and South Korea in respect of their employment shall be taxable in India only if such employment is exercised in India. Thus, it was submitted that the reimbursement of salary paid to the employees is not taxable in India either under the provisions of the Act or under the respective DTAAs. The Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices outside India and payments were also made outside India, the provisions of section 9(1)(ii) of the Act would not be applicable. Thus, he held that when the specific provision relating to taxability of salary income is not applicable, the Assessing Officer could not have brought such income to tax by referring to the provision of section 9(1)(i) of the Act. Thus, ultimately, he deleted the disallowance made by the Assessing Officer. 6. The learned Departmental Representative strongly relying upon the observations of the Assessing Officer submitted, undisputedly, the employees who received the salary income were rendering services for the Metro Rail Project in India. Therefore, the business connection is established. That being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices while located at Head Office. Though, such services were rendered in connection with the Metro Rail Project in India. Therefore, it requires to be examined whether the salary paid to non residents towards services rendered in course of their employment in the country of a residence can be deemed to accrue or arise in India. In this context, we may refer to clause (ii) of section 9(1) which is a deeming provision. As per the aforesaid provision, the income falling under the head salary is deemed to accrue or arise in India if it is earned in India. Explanation to this provision further clarifies that the salary income referred to must be payable for services rendered in India and will also include the rest/leave period which is preced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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