ITAT: Salary Received From Services Rendered Abroad Aren't Taxable in India
The Income Tax Appellate Tribunal (ITAT), Hyderabad bench, on 22 April 2021, in the case titled Sri Vamsee Krishna Kundurthi (Appellant/ Assessee) v. Income Tax Officer (Respondent/ Revenue) held that if the services are rendered outside India such income would not be taxable in India under the provisions of the Income Tax Act, 1961 (IT Act).
The ITAT coram Judicial Member P Madhavi Devi held that the salary and the foreign allowance were received in India for the services rendered abroad and by virtue of the Double Taxation Avoidance Agreement (DTAA) and the IT Act, there is no bar in law for receiving the money in India.
The factual background of the case is that the assessee, an individual, and an employee of IBM India was outside the country during the relevant assessment year in connection with his foreign assignments.
The assessee received salary and foreign allowance during the relevant period and claimed for deduction in respect of the same while filing his income tax returns.
The Assessing Officer (AO) asked him to produce all the required documents since he had claimed double taxation relief under Section 90 of the IT Act and admitted NIL total income but claimed TDS of Rs. 8,61,345/- in his return.
The assessee failed to produce the Tax Residency Certificate of Austria for claiming the Double Taxation relief under Section 90 as it is statute U/S 90(4) of the IT Act w.e.f. from A.Y. 2013-14 and all other supporting documents.
Hence, the AO denied the tax benefit by further observing that the assessee has neither produced any bank account outside India to prove any credits received outside India nor any mode of receiving the receipts outside India.
The assessee filed an appeal before the ITAT and contended that the same issue had arisen in the case of similar employees of IBM Ltd. before the Tribunal and the Tribunal has granted relief to the assessee in support there several orders of the decisions of the Coordinate Bench of the Tribunal are placed before the Tribunal.
Reliance was also placed by the assessee on the case of ITO v. Sunil Chitranjan Muncif (2013 58 SOT 356 - ITAT, Ahmedabad), wherein it was held that there was no dispute about the fact that the assessee is an NRI and the salary income received by him in India for employment exercised in the UK has been offered by him for taxation in the UK in pursuance of Article 16 of DTAA with the UK. Hence, the salary received by the assessee was not taxable in India in pursuance of DTAA between India and the UK.
The ITAT directed the AO to allow an exemption to the assessee, and held that a similar view was taken in the case of employees of IMB India Ltd. Respectfully following the same; the appeal of the assessee is allowed.