Tarun Kumar Sarkar Vs Dy. DIT (ITAT Kolkata)
A perusal of the Circular No. 13/2017 date 11-4-2017 (As Corrected by Circular No. 17/2017 (F dt. 26-4-2017) shows that salary accrued to a non-resident seafarer for services rendered outside India on a foreign going ship (with Indian flag or foreign flag) shall not be included in the total income merely because the said salary has been credited in the NRE account maintained with an Indian bank by the seafarer. Remittances of salary into NRE Account maintained with an Indian Bank by a seafarer could be of two types : (i) Employer directly crediting salary to the NRE Account maintained with an Indian Bank by the seafarer ; (ii) Employer directly crediting salary to the account maintained outside India by the seafarer and the seafarer transferring such money to NRE account maintained by him in India. The latter remittance would be outside the purview of provisions of section 5(2)(a) of the Act, as what is remitted is not “salary income” but a mere transfer of assessee’s fund from one bank account to another which does not give rise to “Income”. It is not clear as to whether the expression “merely because” used in the Circular refers to the former type of remittance or the latter. To this extent the Circular is vague.
In the instant case, the employer has directly credited the salary, for services rendered outside India, into the NRE bank account of the seafarer in India. In our considered opinion, the aforesaid Circular is vague in as much as it does not specify as to whether the Circular covers either of the situations or both the situations contemplated above. Hence we deem it fit to give the benefit of doubt to the assessee by holding that the Circular covers both the situations referred to above.
Full Text of the ITAT Order is as follows:-
This appeal by assessee is arising out of order of Commissioner (Appeals)-22, Kolkata vide Appeal No. 134/Commissioner (Appeals)-22/KOL/14-15, dt. 2-11-2015. Assessment was framed by DDIT, International Taxation 3 (1), Kolkata under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for assessment year 2011-12 vide his order dated 29-1-2014.
2. The only issue to be decided in this appeal of assessee is as to whether the remuneration received by the assessee in the sum of Rs. 23,71,727 which was directly remitted from foreign to the NRE account of assessee by the foreign company could be brought to tax in the facts and circumstances of the case.
3. The basic facts are that the assessee is a non-resident individual and for the assessment year under appeal i.e., 2011-12, return was filed on 15-6-2011 declaring total income at Rs. 2,09,021. The assessee is a Marine Engineer and was engaged with M/s. Marcator Lines Ltd, Singapore in the capacity as a Marine Engineer. The assessee was paid Rs 23,71,727 on the following dates as under :–
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