9911796707
TMI Blog2024 (6) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment framed by Ld. Assessing Officer [AO] under Section 143(3) r.w. Section 144C(13) of the Income Tax Act, 1961 ('the Act' in short) on 29-12-2017. 02. The grounds taken by the assessee namely 'Nanthakumar Murugesan' in IT(TP)A No.12/Chny/2023, read as under: ''1. The learned AO has in pursuance of the Directions of the Hon'ble DRP erred in the facts and circumstances of the case and in law in issuing the impugned order dated 23 December 2022 issued under Section 143(3) read with Section 144C(13) of the Act against the Appellant for AY 2020-21 disallowing the exemption of INR 1,22,09,830 claimed under Article 15(1) of India- China Double Taxation Avoidance Agreement ('DTAA') read with Section 90 of the Act in respect of the salary income received in India for services rendered in China to BMW Brilliance Automotive Limited (BMW China) in ignorance of the facts, statutory provisions, documentary evidence and judicial precedents cited. 2. The learned AO has in pursuance of the Directions of the Hon'ble DRP erred in the facts and circumstances of the case and in law in disallowing the exemption claimed under Article 15(1) of the India-China DTAA read with S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ignoring the recent favourable decision dated 28 February 2020 of the Chennai Tribunal in the case of Paul Xavier Samy (ITA 2233/Chny/2018) on identical issue. 7. The learned AO has in the facts and circumstances of the case and in the law erred in seeking to initiate penalty proceedings under section 270A of the Act for under-reporting of income. Any consequential relief, to which the Appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, may be thus granted. The Appellant may kindly be given an opportunity of being heard as per the principles of natural justice''. 03. The grounds taken by the assessee 'Sivakarthick Raman' in IT(TP)A No.13/Chny/2023 read as under: '1. The learned AO has in pursuance of the Directions of the Hon'ble DRP erred in the facts and circumstances of the case and in law in issuing the impugned order dated 21 December 2022 issued under Section 143(3) read with Section 144C(13) of the Act against the Appellant for AY 2020-21 disallowing the exemption of INR 1,57,90,190 claimed under Article 15(1) of India-China Double Taxation Avoidance Agreement ('DTAA') read with Section 90 of the Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Appellant while ignoring that the China Tax Return was alternate and sufficient evidence of Residency in China. 4. 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 BMW China in China by the Appellant. 5. The learned AO has in the facts and circumstances of the case and in law erred in levying interest under Section 234B of the Act amounting to INR 4,092. Any consequential relief, to which the Appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, may be thus granted. The Appellant may kindly be given an opportunity of being heard as per the principles of natural justice. All of the above grounds of appeal are without prejudice and notwithstanding each other''. 04. The solitary grievance of the assessee in both the cases are that whether salary earned by an individual for services rendered in China could be subject to exemption under Article 15(1) of Double Taxation Avoidance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2019 till 31.03.2020 and claimed exemption under Article 15(1). The assessee claimed refund of Rs. 41,72,850/- arising out of excess TDS in comparison to tax. However, Ld. AO treated the gross salary received by assessee in India of Rs. 1,22,09,830/- from 'BMW-India' as taxable in India and held that the assessee is not eligible for exemption under the provisions of Article 15 of DTAA between India and China being non-resident in India. 7.2 It transpired that the assessee was employed with 'BMW-India'. He was sent to China on International assignment to 'BMW China' by the employer company 'BMW-India'. The salary continued to be paid in India by the employer 'BMW-India'. The assessee submitted before AO that assessee being tax resident of China, the salary income was taxable in China only and the same has been offered to tax in China. It was further contended before AO that assessee being non-resident, the salary received in India for work performed in China would be exempt in India as per Article 15(1) of DTAA between India and China. The assessee submitted before ld. Assessing Officer that salary is taxable in India only if it accrues in India and salary is considered to be accr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. It is also a fact on record that this salary, for work performed in UK, has been offered to tax in UK which is evident from Tax Returns filed in UK. The assessee submit the as per Article 16(1) of DTAA, this income would be taxable in UK only. Alternatively, the assessee relies on the provisions of Sec.15 read with Sec.5(2) and Sec.9(1)(ii) which provides for taxability of salary on accrual basis and not on receipt basis. However, Ld. CIT(A) has held that the assessee would not be eligible for the benefit of DTAA since DTAA relief is to be given by resident country which is UK in the present case. 6. We find that an identical issue has been addressed by coordinate bench of Chennai Tribunal in Shri Paul Xavier Antonysamy V/s ITO (ITA No.2233/Chny/2018 dated 28.02.2020). In this decision, the bench has held that the provisions of Sec.5(2) are subjected to other provisions of the Act. The regular salary accrued to any assessee is chargeable to tax in terms of Sec.15(a). Even as per the provisions of Sec.9(1)(ii), salary income could be deemed to accrue or arise in India only if it is earned in India in respect of services rendered in India. The bench, reading down Article-1 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed relief for foreign earning not taxable in UK for GBP7952. The same shall be considered by Ld. AO while computing the quantum of income taxable in India as directed by us in preceding para-7. 9. The appeal stands partly allowed in terms of our above order." In the above decision, we have held that salary income as accrued to the assessee for work performed in a foreign jurisdiction would not be taxable in India whereas the salary received for work performed in India would be taxable in India. The benefit of DTAA would be available to the assessee as per the decision of coordinate bench of Chennai Tribunal in Shri Paul Xavier Antonysamy V/s ITO (ITA No.2233/Chny/2018 dated 28.02.2020) wherein it was held by the bench that the provisions of Sec.5(2) are subjected to other provisions of the Act. The regular salary accrued to any assessee is chargeable to tax in terms of Sec.15(a). Even as per the provisions of Sec.9(1)(ii), salary income could be deemed to accrue or arise in India only if it is earned in India in respect of services rendered in India. The bench, reading down Article-1 and Article-15 of India-Australia DTAA, held that Treaty benefit shall be applicable to per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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