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TMI Blog2024 (6) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, salary to the tune of Rs. 1,22,09,830/- received for the employment exercised in China is taxable in China and in the light of Article 15(1) of the India-China DTAA it is exempt income. The proportionate salary for services rendered in India has already been offered to tax in India whereas the balance salary has already been offered to tax in China. The assessee has not claimed any foreign tax credit in any of the jurisdiction. The China tax has been paid. Therefore, we direct the AO to allow benefit of exemption under Article 15(1) of Double Taxation Avoidance Agreement (DTAA) between India and China. Decided in favour of assessee. - Hon ble Shri Manoj Kumar Aggarwal, AM And Hon ble Shri Manu Kumar Giri, JM For the Appellant : Ms. Preeti Goel, C.A. For the Respondent : Mr. A. Sasikumar, IRS, CIT. ORDER PER MANU KUMAR GIRI (JUDICIAL MEMBER) The facts as well as issues raised in aforesaid two appeals [IT(TP)A No.12/Chny/2023 and IT(TP)A No.13/Chny/2023] by different assessee namely Nanthakumar Murugesan and Sivakarthick Raman for Assessment Year (AY) 2020-21 are in substance quite identical. It is admitted fact that adjudication in any appeal would mutatis mutandis apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of the contention of the Appellant. [Para 5, 8 and 9 of impugned order] (vi). The income of the Appellant has been charged to the account of BMW India as expenses (Para 3 of impugned order) (vii). No tax was paid in China contrary to evidence filed i.e China tax returns. 3. The learned AO has in the facts and circumstances of the case and in law erred in holding that the tax residency certificate was not filed by the Appellant while ignoring that the China Tax Return was alternate and sufficient evidence of Residency in China. 4. The learned AO has in the facts and circumstances of the case and in law erred in not taking into consideration the additional evidence filed before the Hon'ble DRP evidencing charge back of salary paid to the Appellant by BMW India from BMW China and the factum of economic employment with BMW China. 5. Without prejudice, the learned AO has in the facts and circumstances of the case and in law erred in ignoring that salary received in India by the Appellant is not taxable in India under Section 5(2) read with Section 9(1)(ii) and Section 15(1)(a) of the Act as the services have been rendered to BMWChina in China by the Appellant. 6. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, he is not eligible to claim benefit of Article 15 of the India-China DTAA on combined reading of Article 15 and 23 of DTAA and DTAA provisions have been incorrectly applied [Para 12(d) and 12(e) of impugned order] (v). Reliance placed on the judgement of Hon'ble Chennai ITAT in the case of Shri Swaminathan Ravichandran (ITA No.299/Mds/2016) and Shri Dennis Victor Rozaria (ITA No.298/Mds/2016), while ignoring the decision of the Hon'ble Chennai ITAT in Paul Xavier Samy (Shri Paul Xavier Antony samy Vs. ITO, International Taxation 2(1), Chennai LT.A No. 2233/Chny/2018 dated 28 February 2020) [Para 11(a) of impugned order] (vi). Article 15(2)(b) of the DTAA does not apply as the employer BMW India is Resident in India and hence salary received by the Appellant is taxable in India. [Para 12(e) of impugned order] (vii). The Appellant could not prove that expenses incurred by BMW India were borne by BMW China The income of the Appellant has been charged to the account of BMW India as expenses. (Para 12(e) of impugned order) (viii). Cases relied upon are distinguishable (Para 11 of impugned order) (ix). The Hon'ble DRP has incorrectly concluded that no tax was paid in Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submit that salary is taxable in India only if it accrues in India and salary is considered to be accrued where the employment is exercised. Ld. AR would also submit that this issue is covered in favour of the assessee by the Co- ordinate bench order in the case of Shri Ramesh Kumar AE Vs ITO for AY 2015-16 in IT(TP)A 51/Chny/2018 dated 11.08.2023. 06. Per contra, the Ld. CIT-DR, relied on the orders of lower authorities. 07. We have heard the both parties, perused the materials available on record, paper book and gone through orders of the authorities below. Brief facts are that the assessee is assessed as non-resident in AY 2020-21 as he had spent only three days in India. The appellant was an employee of the M/s BMW India Pvt. Ltd ( BMW-India in short) during the previous year 2019-20. During Financial Year 2019-20 the appellant was seconded on overseas assignment to China by his employer BMW-India . The appellant received gross salary of Rs. 1,22,09,830/- for services rendered in China to BMW Brilliance Automotive Limited ( BMW China or BBA in short) and claimed exemption under Article 15(1) of DTAA between India and China. 7.1 The assessee filed return of income on 24.11.2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ld.AR Ms. Preeti Goel, which includes China tax return (page Nos.50-54), Copy of passport showing total 3 days stay in India (Pg Nos.64-89 @89), Labor contract with BBA (Pg Nos.7- 21), submissions dated 10.11.2021 filed before AO. We find substance in the arguments of the Ld.AR that assessee being tax resident of China, the salary income was taxable in China only. In fact, salary to the tune of Rs. 1,22,09,830/- received for the employment exercised in China is taxable in China and in the light of Article 15(1) of the India-China DTAA it is exempt income. We have also gone through the Co-ordinate Bench decision cited in the case of Shri Ramesh Kumar AE Vs ITO for AY 2015-16 in IT(TP)A 51/Chny/2018 dated 11.08.2023. The Coordinate Bench order held as under:- 4. We find that similar issue, on similar facts, has been decided by us in our decision titled as Shri Kanagaraj Shanmugam vs. ITO (ITA No.2936/Chny/2018 dated 07.09.2022) as under: - Our findings and Adjudication 5. From the fact it emerges that the assessee has stayed in India for 63 days during this year and his status, as per law, is non-resident. The assessee has worked in India for 21 days and offered proportionate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manabandyopadhyay V/s DDIT (TS281-HC- 2017) as well as CBDT Circular No.13/2017 dated 11/04/2017. 7. We find that facts are pari-materia the same before us and the ratio of this decision is squarely applicable to the present case. Therefore, we would hold that salary income as accrued to the assessee for work performed in UK would not be taxable in India. However, the salary received for work performed in India would be taxable in India. Accordingly, we direct Ld. AO to re-compute the income of the assessee. The above proposition is also supported by the fact that upon perusal of UK tax return, it could be seen that the assessee has offered earnings from employment for 24184 on net basis which has been tax grossed up for 6046. This is in view of the fact that OFSSL has paid provisional payment of 9062 to UK revenue authorities since the employer has undertaken to meet the UK income tax liability arising from employee s earnings in UK. Accordingly, the assessee has claimed refund of 3016. On the basis of the above, it could be seen that separate tax payment has been made by OFSSL to UK revenue authorities to discharge the tax liability of the assessee in that country. 8. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ozario (ITA No.298/Mds/2016 dated 06.01.2017) as well as another decision of SMC bench in Shri M.Ramesh Kumar (ITA No.1979/Mds/2017 dated 16.11.2017) which has taken a view against the assessee. However, both these decisions have been rendered by SMC bench and therefore, we are inclined to follow our own decision as cited above which has been rendered by coordinate bench. The Ld. AO is directed to re-compute the income of the assessee. The substantiative grounds raised by the assessee stand allowed which render additional grounds of appeal as infructuous. In the result, the appeal of the assessee is allowed in terms of our above order. 9. We have gone through order cited supra and respectfully agreed with the view taken by the Coordinate bench in IT(TP)A No.51/Chny/2022 etc dated 11.08.2023 for AY 2015-16. We find that identical fact exists before us in the present appeals. The proportionate salary for services rendered in India has already been offered to tax in India whereas the balance salary has already been offered to tax in China. The assessee has not claimed any foreign tax credit in any of the jurisdiction. The China tax has been paid. Therefore, we direct the AO to allow b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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