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TMI Blog2025 (1) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... , AM: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals) 57, Mumbai (in short the CIT(A) ) dated 26.07.2024 for assessment year 2013-14. The assessee raised the following grounds of appeal 1. That on the facts and circumstances of the case and in law, the Assessing Officer ( AO ) vide order dated March 29, 2016 has erred in completing the assessment of the Appellant at an income of INR 53,07,765 as against the income declared by the Appellant of INR 6,89,690. 2. That on the facts and circumstances of the case and in law, the CIT erred in upholding Aos stand in making an addition of INR 45,08,074 in respect of salary received by the Appellant from her international assignment. 2.1. That on the facts and circumstances of the case and in law, the CIT erred in upholding AOs stand in denying salary exemption claimed under section 9(1)(ii) of the Act and concluding that the salary received by Appellant from her international assignment shall be deemed to accrue or arise in India under section 5(2) of the Act. 2.2. Without prejudice to the above grounds of appeal, the CIT erred in upholding AOs stand in making an addition of INR 45,08,074 in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 5(2) of the Act. The CIT(A) however directed the AO to give corresponding credit towards TDS as per Form 16. The relevant findings of the CIT(A) in this regard is extracted below 5.3 The facts recorded and findings of the AO in the assessment order and the submissions made by the appellant has been considered. The facts of the case of the appellant are that the appellant was a non-resident for AY 2013-14. The appellant was employee of M/s. BG Exploration Production India Limited. The appellant was sent on assignment to Egypt by the employer company by a letter dated 04.07.2012. The appellant was sent on assignment for a period of 24 months from 01.08.2012. From the form 26AS, it is seen that M/s BG Exploration Production India Limited had paid salary of Rs. 45,08,074/-, on which TDS of Rs. 13,17,237/- was deducted. The appellant filed Retum of income in ITR-2 on 29.07.2013. As per the computation of total income, total salary of Rs. 50,45,173/- was shown as income. The salary was shown as reflected in Form 26AS and Form No. 12BA issued by M/s. BG Exploration Production India Limited. The salary of Rs. 41,59,580/- was claimed as exemption under section 9(1)(ii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sources, which was accrued or received or deemed to be accrued or received in India in such year by or on behalf of such person or accrue or arises to him in India during such previous year. Hence the total salary income earned by the appellant is taxable in India as per provisions of IT Act, 1962. The appellant has also submitted that the appellant is a resident of the Egypt during the year under consideration, therefore, as per Article 16 of the India-Egypt Treaty, the salary income is taxable in Egypt. From perusal of the Article of the India- Egypt Treaty, it is seen that the salary derived by resident of Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be taxed in that other State. From the facts of the case of the appellant, the appellant has not brought on record that the employment was exercised in Egypt or not. Therefore, provisions of Article 16 are not applicable in the case of the appellant. In view of the above facts and discussion, the adjustment of salary income of Rs. 45,08,074/-. 4. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not recorded any contrary finding with regard to the residential status declared by the assessee as a non-resident. Therefore it is not in dispute that the residential status of the assessee is that of a non-resident. 7. The assessee while filing the return of income has offered to tax a sum of Rs. 8,84,993/- towards income from salary though as per Form 16 the salary income is Rs. 50,44,573/-. The assessee claims that the salary income earned from 01.08.2012 does not accrue in India since the services are rendered outside India. Once the residential status of the assessee is held to be non-resident then for the purpose of determining the taxability of salary income earned by the assessee the provisions of section 9(1)(ii) of the Act which read as under have to be looked into 9. (1) The following incomes shall be deemed to accrue or arise in India : (i) ***** (ii) income which falls under the head Salaries , if it is earned in India. Explanation. For the removal of doubts, it is hereby declared that the income of the nature referred to in this clause payable for (a) service rendered in India; and (b) the rest period or leave period which is preceded and succeeded by services re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned advocates appearing for the parties and after perusing the orders passed by the authorities and after having given our anxious consideration to the contentions raised, we are of the considered view that there is no substantial question of law involved in this appeal for being formulated and the adjudicated for the following reasons: (a) The revenue does not dispute that assessee had worked as a Chief Engineer on the board of a ship bebnging to his employer M/s. Live Stock Transport Trading Company, Kuwait and during the relevant period the assesses had stayed outside India for a period of 225 days and the salary that was earned by him was on account of the work discharged by him on board during the said period which is outside the shores of India. b) The CIT (A) has placed reliance in the case of CIT Vs. Avtar Singh Wadhwan [2001] 247 ITR 260 (Bom) wherein it has been held that salary received by the non resilient marine engineer for services rendered by him on a foreign going Indian ship which mainly remained away from the Indian coast during the relevant accounting year accrued outside India and was not taxable in India. While answering the question of law there unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not properly apply the provisions of law to the case of the assessee. We are of the view that the Assessing Officer was wrong in adding the aforesaid sum to the income chargeable to tax of the assessee for the relevant assessment year. We accordingly allow the appeal and answer the question framed by us in favour of the assessee. 10. A similar view has been held by the Delhi Bench of the Tribunal in the context of revision under section 263 in the case of Pramod Kumar Sapra (supra) and held that 7. We have heard the rival submissions; perused the relevant material referred to before us and also the finding given in the impugned order. The sole basis/ reason for exercising jurisdiction under section 263 by the Ld. Pr. CIT is that, the claim of deduction of salary amounting to Rs. 40,04,830/- has not been properly examined by the Assessing Officer while allowing the said deduction. The assessee, who is employed with M/s Reliance Industries Limited, was deputed as Country Manager to Kurdistan, Iraq, w.e.f 16/4/2010 for the purpose of his employment in Iraq he has received salary. In the annual return of income filed in India on 14/7/2011, assessee has claimed exemption of salary ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckoned as resident in India. Sub-section (1) of section 6 clearly provides that an individual is said to be resident in India in any previous year for the purpose of this Act if he is an India in that year for a period of or periods amounting in all to one hundred and eighty-two days or more; or having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. So far as the second criterion of four years as given in clause (c) of sub-section (1) of section 6, the same is not applicable here. For the purpose of present case, only criterion, which is to be seen, is whether the assessee can be said to be resident in India in terms of clause (a) which clearly stipulates that assessee should have been resident in India for a period of 182 days or more. If the assessee in the previous year has not stayed in India for more than 182 days, then ostensibly such an income cannot be taxed in the hands of the assessee individually as a resident of India. The assessee before the Pr. CIT and also before the Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be held to be taxable because he was not resident in India, as admittedly he was outside India for more than 182 days. Accordingly, salary of the assessee cannot be taxed in India and the same has rightly been claimed as deduction in the return of income. Thus, on merits we hold that the assessment order passed by the Assessing Officer is not prejudicial to the interest of the Revenue, albeit can be reckoned as erroneous in the absence of any proper enquiry. It is trite law that revisionary jurisdiction under section 263 on an assessment order can only be exercised once the said order is found to be erroneous insofar as it is prejudicial to the interest of the Revenue, i.e., both the conditions should fulfill simultaneously and this has been held so by the Hon'ble Supreme Court, which has been referred and relied upon by the ld. CIT D.R., in the case of Malabar Industrial Co. Ltd. Vs. CIT reported in [2000] 243 ITR 83 (SC), which principle has been reiterated later on not only by the Hon'ble Supreme Court but also by several High Courts. Thus, even if one of the limbs of said expression used in section 263 is missing, then ostensibly the assessment order cannot be set as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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