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TMI Blog2024 (8) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... ites accrued to the appellant for the services rendered outside India from the date of grant to the date of vesting hence, the same does not form part of the scope of the total income of the non-resident and accordingly it is not taxable in India. Disallowance of exemption claimed by the appellant in this context, we find that Section 90(2) of the Act purely attracts in this case as we have already held that appellant satisfied the requisite condition to be eligible to claim the exemption as per the DPS Clause of India-UK DTAA. Appellant has filed copy of tax residency certificate and in this way, appellant qualified to be a tax resident of United Kingdom during United Kingdom tax year and accordingly, we are of this opinion that salary income as claimed be exempted under Article 16(1) of the India-UK DTAA. Disallowing the deduction claimed under Chapter VI-A and disallowing the long-term capital gain exemption u/s 10(38) of the Act have been allowed by the ld. CIT(A) in appeal subject to the above verification and directed the AO to verify the matter. So, it is needless to discuss the above grounds. - Dr. Manish Borad, Accountant Member And Pradip Kumar Choubey, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 16A issued by Kotak Mahindra Bank Ltd.] 2.1. Ld. CIT(A) in the appeal has taken the issue ground-wise and in his judgement dismissed the grounds of the appellant that the Assessing Officer (hereinafter referred to as ld. 'AO') erred in law and in facts in assessing the income of the appellant at INR 1,15,28,610/- as against the return of income of INR 2,55,640/- and further dismissed the ground that ld. AO ordered in law and in facts in adding the foreign allowances to the total income of the appellant which was received as per the appellant outside India for service rendered in United Kingdom. The ld. CIT(A) has further dismissed the ground in which appellant has challenged the order of the AO in adding the value of stock prerequisite amounting to Rs. 1,59,053/- and further dismissed the ground taken by the appellant in which the AO disallowed the exemption claimed by the appellant under Article 61 of the India-UK Double Taxation Avoidance Agreement amounting to INR 57,93,857/-. So far as other grounds are concerned the observation of the ld. CIT(A) is that the ground is statutorily allowed subject to the above verification and directed the AO to verify the veracity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order erred in not deleting interest levied under section 234D of the Act 13. That the Ld. AO erred on facts and in law in initiating penalty proceedings under section 271(1)(c) of the Act on the ground of furnishing inaccurate particulars of income. 2.2. Ld. Counsel for the assessee challenges the impugned order thereby submitting that the appellant was employed with the IBM India Pvt. Ltd. during the AY 2016-17 and he was sent on an assignment to United Kingdom. Ld. Counsel for the assessee further submits that during the aforesaid assessment year the appellant continued to receive salary from IBM India Pvt. Ltd. the salary had been duly disclosed and offered to tax in the return of income filed by the appellant. In addition to that the appellant has also received a sum of INR 48,39,078/- as foreign allowances outside India for services rendered in United Kingdom. Ld. Counsel for the assessee further submits that appellant is a qualified non-resident Indian during the AY 2016-17 and a non-resident would be taxable in India only in respect of income received/deemed to be received in India or the income accrued/deemed to be accrued in India. According to him the foreign allowances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve parties, we have perused the order of the AO and ld. CIT(A). It is pertinent to mention here that the AO in his order has stated that after issuance of notice to the assessee through e-mail of ITBA portal, assessee did not comply. Notices and questionnaire were also duly served to the assessee on e-mail but the assessee failed to comply and when the rescheduled date of submission/hearing date has been lapsed and the assessee has failed to furnish in any manner whatsoever by taking cognizance and as such left with no other recourse to the matter, proceeded to make an assessment of the assessee s returned income as per the provisions contained in u/s 144 of the Act and accordingly he passed order as well as started penalty proceedings. Before the ld. CIT(A) as it appears from the records that the assessee has taken almost 13 grounds of appeal and while we have gone through the decision of ld. CIT(A) it appears to us that ld. CIT(A) has also called for the remand report from the AO and going over the remand report as well as considering the documents and submissions of the assessee passed the impugned order in which he took the ground nos. 2-5 and dismissed it but so far as ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015-16 h) Copy of Assignment Letters issued by IBM India Private Limited i) Copy of Statement of Salary account held with Kotak Mahindra Bank for FY 2015-16 4.3. From the records it admits of no doubt that appellant is qualified as a non-resident Indian during the previous AY 2015-16 as it is evident from his stay in India during the relevant previous year. Ld. Counsel for the assessee submitted that foreign assignment allowances were paid by IBM India Pvt. Ltd. to the international travel card outside India. Once an employee is sent on foreign assignments the travel card issued to the employee by Axis Bank Ltd. IBM India Pvt. Ltd. maintains an exchange under foreign currency account with on Dutch Bank, Bangalore. From the exchange under foreign currency account of Dutch Bank funds are transferred to the foreign banks outside India with whom Axis Bank maintains the nostro account. The following two grounds are to be taken for adjudication: That the ld. Assessing officer erred in law and facts in assessing the income of the Appellant at INR 11,528,610 as against return income of INR 255,640 That the ld. Assessing Officer erred in law and facts, in adding the foreign allowances to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l card of the employees are credited outside India upon instruction from IBM. It is therefore very clear that the funds are credited from outside India and the Appellant is also in first receipt of the foreign assignment allowance outside India, i.e., both the payment and first receipt of foreign assignment allowance is outside India. It is important to mention here that Explanation 1 to Section 5(2) of the Act, the intent of legislature is to tax income on a receipt basis and in the given case as explained above in detail the first receipt of foreign assignment allowance in the hands of employee is only outside India. Going over the discussion made above it is therefore clear that foreign assignment allowance is credited to the Axis travel currency card of the Appellant outside India, i.e., place of receipt of foreign assignment allowance is outside India. Hence, keeping in the mind of Explanation 1 to Section 5(2) of the Act, receipt of salary has to be seen from the point of the recipient which in this case is outside India. 4.4. Now we have gone through the cited decisions of the assessee and find that Hon'ble Karnataka High Court in the matter of DIT (International Taxatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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