Case Law Details
Smt. Maya C Nair Vs ITO (ITAT Bangalore)
The contention that the assessee did not furnish TRC and therefore it cannot be allowed the exemption is not correct. The furnishing of TRC is applicable only to cases where the benefits under the DTAA are claimed; as can be made out from a plain reading of Sec.90(1) of the Act. Further, in the decision cited by the learned Departmental Representative (supra), the Tribunal had held that absence of TRC cannot be a ground for denying the benefit of DTAA. It has only held that the assessee should furnish evidence for the claim of exemption. In the case on hand, the assessee has furnished evidence of her stay abroad in the year under consideration before the Assessing Officer and as the salary for services rendered did not accrue in India for that period of stay outside India, that salary income is not taxable in India. I, therefore, am inclined to agree with the assessee’s contention that the finding of the CIT(Appeals) – 12 in her order dt.31.10.2017 is based on application of sound principles to the facts of the assessee’s case and no useful purpose would be served by remanding the case to the CIT(Appeals)-10, Bangalore, as sought by the learned Departmental Representative. In view of the above, we hold that the addition made by the Assessing Officer to the salary income of the assessee is incorrect and the action of the CIT(Appeals)-10 in confirming the said addition ex-parte, without examining the facts and underlying principles of the case and judicial pronouncements in this regard is untenable and is therefore cancelled. Consequently, the grounds raised by the assessee are allowed.
Condonation of delay, substantial justice should prevail over technical considerations
Admittedly there has been a delay of 112 days in filing the appeal. The Hon’ble Apex Court in the case of MST Katiji & Others (167 ITR 471) (SC), while explaining and laying down the principles that need to be kept in mind while considering an application for condonation of delay, has emphasised that substantial justice should prevail over technical considerations. The Hon’ble Court also explained that a litigant does not stand to benefit by lodging the appeal late and that the expression ‘every day’s delay must be explained’ does not mean that a pedantic approach should be taken. The doctrine should be applied in a rational, common sense and pragmatic manner.
Taking into account the aforesaid principles laid down by the Hon’ble Apex Court and after careful consideration of the submissions / reasons put forth by the assessee in the Affidavit, I am of the considered opinion that there was sufficient and reasonable cause for the delay of 112 days in filing this appeal, as even if the said delay is condoned, no loss would be caused to Revenue, as legitimate taxes payable in accordance with law alone will be collected. In the aforesaid factual matrix of the case in hand and judicial precedents on the subject, referred to above, I condone the delay of 112 days in filing this appeal before the Tribunal and admit the appeal for consideration and adjudication. It is accordingly ordered.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-10, Bangalore dt.28.02.2018 for the Assessment Year 2013-14.
2. Briefly stated, the facts of the case are as under :-
2.1 The assessee is an individual earning income from salary. For Assessment Year 2013-14, the assessee filed her return of income on 30.07.2013 declaring income of Rs.3,39,880 and the case was subsequently taken up for scrutiny for the year under consideration.
2.2 In the course of assessment proceedings, it emerged from the details on record that in the year under consideration, the assessee was sent on an international assignment to the USA by her employer M/s. 3M India Limited. In the year under consideration, the assessee received total income of Rs.41,17,255 as salary and allowances and the salary was entirely credited to the Bank Account the assessee maintained in India. In the computation / statement of income, the assessee has shown an amount of Rs.4,77,739 as taxable in India under the head ‘Salary’ and shown an amount of Rs.36,39,515 as exempt income. Before the Assessing Officer the assessee submitted that she was sent on an international assignment by her employer. Since her stay in India was less than 182 days in the year under consideration, she qualifies as Non-Resident and as salary income is chargeable on “accrual basis”, the salary for the period when she served in the USA does not accrue in India and therefore is not exigible to tax in India. The Assessing Officer, however, did not agree with the contentions of the assessee for the following reasons as emerge from the order of assessment :-
(i) that the assessee did not produce confirmation from her employer in India or in the USA to establish that she was working in the USA for the said period.
(ii) since the salary is received in India, the surrounding circumstances suggest that services are rendered in India, unless the contrary is proved.
(iii) The assessee’s case falls under the purview of the India – USA – DTAA and the assessee has failed to provide a Tax Residency Certificate (‘TRC’) to claim the benefits of DTAA.
Therefore, the Assessing Officer was of the view that since the assessee failed to furnish the ‘TRC’, the amount of Rs.36,35,516 claimed as exempt income by the assessee is exigible to tax in India. The Assessing Officer accordingly completed the order of assessment under Section 143(3) of the Income Tax Act, 1961 (‘the Act’) vide order dt. 31.3.2016 wherein the assessee’s income was determined at Rs.40,55,234; in view of the following additions –
(i) Including Rs.36,39,516 claimed as exempt and
(ii) An amount of Rs.5,541 under the head ‘ Income from House Property ’.
2.3 Aggrieved by the order of assessment dt. 31.3.2016 for Assessment Year 2013-14, the assessee filed an appeal before the CIT(Appeals) – 12, Bangalore. The learned CIT(Appeals) after hearing the case and considering the submissions put forth disposed off the assessee’s appeal vide order in ITA No.239/CIT(A)-12/2017-18 dt. 31.10.2017 granting partial relief to the assessee.
2.3.1 On the issue of salary of Rs.36,39,516 claimed as exempt, the learned CIT(Appeals) held that since the assessee has been accepted to be Non-Resident by the Assessing Officer, the income accruing out India is not exigible to tax in India. In coming to this finding, the learned CIT(Appeals) placed reliance on the following judicial pronouncements of Hon’ble Karnataka High Court in –
(i) DIT Vs. Prahalad Vijendra Rao in ITA No.838/2009 (Karnataka) dt. 8. 10.2010;
(ii) ITO Vs. Bholanath Pal in ITA No.10/Bang/2011 of ITAT, Bangalore Benches.
2.3.2 On the issue of addition under the head ‘Income from House Property’, the addition made was sustained as the assessee failed to furnish evidence to support her claim that rent was received only up to October, 2012 and the property was lying vacant from Nov., 2012 to March, 2013.
2.4 Subsequently, another appellate order was passed by CIT(Appeals) – 10, Bangalore in the case on hand for the very same assessment year 2013-14 on the same appeal vide an ex-parte order dt. 28.2.2018. In the said order, this CIT(Appeals) upheld the action of the Assessing Officer in taxing the income of Rs.36,39,516 claimed as exempt. In the said order at para 4 thereof, the CIT(Appeals) has mentioned that three notices for hearing of the appeal on various dates were sent to the assessee, but none appeared and therefore the CIT(Appeals) passed an ex-parte order confirming the additions / disallowances made by the Assessing Officer. It is in respect of and against this order of CIT(Appeals) – 10, Bangalore dt.28.2.2018 for Assessment Year 2013-14 that the assessee has preferred this appeal.
ORDER ON CONDONATION OF DELAY IN FILING THE APPEAL
FOR ASSESSMENT YEAR 2013-14.
3.1 Admittedly, there is a delay of 112 days in filing this appeal before the Tribunal. Along with the appeal filed before the Tribunal by the assessee against the order of CIT(A) – 10, Bangalore dt.28.2.2016 for Assessment Year 2013-14, the assessee has filed an application for condonation of delay in filing this appeal accompanied by an Affidavit sworn to by the assessee. In the Affidavit the assessee has submitted the following reasons for the delay in filing this appeal which are extracted hereunder :-
2. I wish to submit that the Assessment for assessment year 2013 – 14 was completed by the Income Tax Officer, International Taxation, Ward 1(2). Bangalore, under section 143(3) of the Income Tax Act, 1961 (‘Act’) vide Order dated 31-3-2016and served on me on 5-4-2016.
3. I filed an appeal before Commissioner (Appeals) against the assessment order on 4-5-2016 which is within 30 days from receipt of assessment order.
4. My case was heard by Commissioner (Appeals)-12 on various dates and vide her Order dt. 31-10-2017 partially allowed the grounds of appeal filed by me on 5-4-2016
5. Subsequently, I received an order on March 2, 2018 from CIT (A)-10 dated 15th February 2018 for same assessment year, dismissing the grounds of appeal filed by me.
6. It may be noted that I had already received a favourable order from CIT (A)12 for the assessment year.
7. Further, I did not receive any notice from the CIT (A)-10 to attend the hearing for the year. Hence neither me nor my representative appeared before CIT (A)-10 for the hearing.
8. In response to the order from CIT (A)-10, I had filed a rectification application 10 on 17th May 2018 to consider the order already passed by CIT (A)-12 and to rectify the order passed by him.
9. I was of the bonafide opinion that the order issued by the CIT (A)-12 is the final order for the FY 2012-13 and was under impression that the order passed by CIT(A)-10 shall be withdrawn.
10. However, subsequently, I also received notice u/s 154 of the Income Tax Act 1961 from CIT (A)-12 dated 7th June 2018 informing that the order passed by her is invalid for the assessment year. In response to this a submission was filed by me vide letter dated 4th July 2018. However, I have not received any response to the letter filed CIT (A) (12) till date.
11. Given that there was communication from two CIT (A) for the same assessment year and there was no clarity as to the actions to be taken by me, there was a delay of 112 days in filing of the appeal against the order passed by CIT (A)-10.
3.2 As per the petition and Affidavit sworn to by the assessee, now filed before the Tribunal, admittedly there has been a delay of 112 days in filing the appeal. I have heard both parties and perused the Affidavit filed by the assessee seeking condonation of delay in filing the appeal and the judicial precedents in this regard. The Hon’ble Apex Court in the case of MST Katiji & Others (167 ITR 471) (SC), while explaining and laying down the principles that need to be kept in mind while considering an application for condonation of delay, has emphasised that substantial justice should prevail over technical considerations. The Hon’ble Court also explained that a litigant does not stand to benefit by lodging the appeal late and that the expression ‘every day’s delay must be explained’ does not mean that a pedantic approach should be taken. The doctrine should be applied in a rational, common sense and pragmatic manner.
3.3 Taking into account the aforesaid principles laid down by the Hon’ble Apex Court and after careful consideration of the submissions / reasons put forth by the assessee in the Affidavit, I am of the considered opinion that there was sufficient and reasonable cause for the delay of 112 days in filing this appeal, as even if the said delay is condoned, no loss would be caused to Revenue, as legitimate taxes payable in accordance with law alone will be collected. In the aforesaid factual matrix of the case in hand and judicial precedents on the subject, referred to above, I condone the delay of 112 days in filing this appeal before the Tribunal and admit the appeal for consideration and adjudication. It is accordingly ordered.
O R D E R
4. In the appeal for Assessment Year 2013-14 before the Tribunal, the assessee has raised the following grounds :-
1. That, based on the facts and circumstance of the case, the learned Commissioner (Appeals) has erred in assuming the jurisdiction over the case where the order under section 250 of the Income Tax Act, 1961 (‘The Act”) was already passed by another Commissioner (Appeals) (CIT Appeal 12) and served upon the Appellant.
2. That based on the facts and circumstances of the case, the learned Commissioner (Appeals) (“Learned CIT(A)”) has passed the assessment order which is contrary to the provisions of the Income Tax Act, 1961 (the Act’).
3. That, based on the facts and circumstances of the case, the learned Commissioner (Appeals) has erred by ignoring that section 5 of the Act is -‘subject to other provisions of the Act” and by ignoring the provisions of taxability of salary enunciated under section 15 of the Act.
4. That, based on the facts and circumstances of the case, the learned Commissioner (Appeals) has erred by ignoring the place of accrual of salary and in considering the subsequent receipt as taxable in India.
5. That based on the facts and circumstances of the case, the learned Commissioner (Appeals) has erred by considering Rs. 36, 39.516 received for services rendered outside India as taxable in India,
6. That, based on the facts and circumstances of the case, the learned Commissioner (Appeals) has erred in presuming that benefit under a double taxation avoidance agreement is necessary for a Non Resident to claim non-taxability of salary which is earned outside India.
7. The learned Commissioner (Appeals) has ignored the submissions made during, the course of assessment on the taxability of salary income based on the domestic tax laws.
8. The learned Commissioner (Appeals) erred in mentioning that the salary income received in India pertaining to services rendered overseas has been claimed as exempt under India -USA Double Taxation Avoidance Agreement (DTAA).
9. Learned Commissioner (Appeals) erred in mentioning that the appellant had not submitted any. The documents to prove that the salary income claimed as exempt was in fact India.
10. The learned Commissioner (Appeals) erred in stating that several communications were sent to the appellant for hearing and none appeared on any of the hearing dates and no written submission was made.
11. The learned Commissioner (Appeals) has erred by not taking cognizance of the appeal Order dated 27-10-2018 already received from the Commissioner (Appeals)-12 for the same assessment year.
12. The learned Commissioner (Appeals) has erred by not taking cognizance of the fact that the residential house property was let out only for part of the year.
13. The learned Commissioner (Appeals) ought to have given the appellant the opportunity to be heard and to enable the appellant to provide the explanation in connection with the exemption claimed towards salary income,
5. Ground Nos.1 to 11 – Taxability of salary income for services rendered outside India.
5.1.1 In appellate proceedings before the undersigned, the learned Authorised Representative of the assessee assailed the order of the CIT(Appeals) – 10, Bangalore on jurisdictional and procedural grounds, as well as on the merits of the issue for consideration; i.e. the taxability of salary income for services rendered outside India. According to the learned Authorised Representative, it is unprecedented that two appeal orders can be passed by two different CIT (Appeals), on the same appeal for the same assessment year for the same assessee. It is submitted that if the passing of the two appellate orders was unprecedented, the subsequent attempt by the CIT(Appeals) – 12, Bangalore to hold her own order as invalid, by resorting to section 154 of the Act is absolutely untenable; especially after issuance of notices for hearing, taking the assessee’s submissions on record; consideration thereof and adjudicating on the issues raised in appeal. In these undisputed factual circumstances, it is contended that the order of the CIT(Appeals) – 12, Bangalore dt.31.10.2017 in the case on hand for Assessment Year 201314 is final and consequently, the subsequent order of CIT(Appeals) – 10, Bangalore dt.28.2.2018 is without jurisdiction and requires to be quashed at the threshold. It was further submitted that the CIT(Appeals) – 10 had passed the impugned order ex-parte without considering the submissions of the assessee and though the CIT(Appeals) has mentioned that notices were sent, these notices have not been received by the assessee. It is therefore clear that the CIT(Appeals) – 10 has passed the impugned ex-parte order mechanically by confirming the additions of the Assessing Officer and requires to be cancelled.
5.1.2 According to the learned Authorised Representative, the merits of the issue raised in the appeal has already been examined by the CIT(Appeals) – 12, Bangalore and after detailed examination of the facts of the case and applying the principles and legal precedents laid down by the Hon’ble jurisdictional High Court of Karnataka and the ITAT, Bangalore in their orders, has deleted the addition / disallowance made by the Assessing Officer. On the merits of the issue, it is the learned Authorised Representative’s contention that the Assessing Officer had completely misdirected himself on this issue as the assessee has not sought any relief under the India – USA, DTAA. The assessee had in fact claimed the exempt income under the provisions of Sec. 5 (2) r.w.s. 15 of the Act and not the DTAA provisions. It is submitted that the judicial pronouncements relied upon by the CIT(Appeals) – 12, Bangalore in her order dt. 31.10.2017 apply squarely to the facts on the assessee’s case and therefore the CIT(Appeals) – 12 was right in giving relief and upholding the assessee’s claim on this issue. The learned Authorised Representative contends that while the impugned order of the CIT(Appeals) – 10, Bangalore dt.28.2.2018 is void-ab-initio, no prejudice will be caused to Revenue, as there is no merit in the addition made by the Assessing Officer and which has already been considered on merits and deleted by the CIT(Appeals) – 12.
5.2.1 Per contra, the learned Departmental Representative for Revenue admitted that there has been some confusion internally in the Department due to which the earlier appellate order of the CIT (Appeals) – 12, Bangalore dt. 31.10.2017 is invalid. The learned Departmental Representative referred to the notice of the CIT (Appeals) – 12 dt.7.6.2018 issued under Section 154 of the Act to point out that the confusion was caused due to mistake apparent from the record and justified the action of the CIT (Appeals) – 12 to nullify her order dt. 31.10.2017 by resorting to rectification under Section 154 of the Act. The learned Departmental Representative also pointed out that the CIT (Appeals) – 10, Bangalore had issued three notices and hence cannot be faulted for passing the impugned order ex-parte. The learned Departmental Representative prayed that the matter may be remanded back to the file of the CIT (Appeals) – 10, Bangalore who has the correct jurisdiction, to adjudicate the matter afresh, after considering the submissions of the assessee.
5.2.2 On the merits of the issue, the learned Departmental Representative referred to the decision of the ITAT, Ahmedabad Bench in the case of Skaps Industries India Pvt. Ltd. Vs. ITO in ITA Nos.478 & 479/Ahd/2018 wherein it was held that failure to submit TRC is not a bar to the grant of benefits under DTAA, but the assessee is required to produce evidence of the entitlement of the foreign entity to benefits under the DTAA and the matter was remitted back to the file of the CIT (Appeals). It is submitted that, in the case on hand also, the matter needs to be remitted back to the file of the CIT (Appeals) for verification.
5.3.1 In rejoinder, the learned Authorised Representative of the as vehemently objected to the DR’s plea for remanding the matter back to the file of CIT (Appeals) for verification. According to the learned Authorised Representative, this issue has already been examined by one CIT (Appeals) and a reasoned order has already been passed and therefore no purpose would be served by remanding it back to the file of CIT (Appeals) – 10, Bangalore for fresh consideration. The learned Departmental Representative argued that it is not revenue’s case that the CIT (Appeals) – 12, Bangalore has passed a wrong order by not evaluating the facts correctly OR applying the legal principles and precedents wrongly. That being so, another round of appeal proceedings will only result in further hardship and harassment to the assessee.
5.3.2 On the merits of the issue, the learned Authorised Representative reiterated that the assessee has claimed exemption under the provisions of the Income Tax Act, 1961 and not the DTAA and therefore the case law cited by the learned Departmental Representative (supra) does not apply to the assessee’s case at all. It was also pointed out that the assessee had submitted her passport and visa details to the Assessing Officer in order to establish that she was abroad for the stated period and the copy of the USA Tax Return was also furnished; copies of which are at pages 119 to 146 of the Paper Book filed by the assessee. In view of the above facts, the learned Authorised Representative prayed that the impugned ex-parte order of CIT (Appeals) – 10, Bangalore be quashed.
5.4.1 I have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncements cited (supra). The basic undisputed facts are that the assessee is a salaried employee who was sent by her employer on deputation to USA for a part of the year under consideration. Therefore, in the year under consideration, her stay was partly in India and partly abroad. However, her salary for the entire year has been credited by her employer in her bank account in India. As her period of stay in India, in the year under consideration, was less than 180 days, her status is of a “Non-Resident”, which is not disputed by the Assessing Officer. For the period of her stay abroad, she had paid her taxes and filed the return of income in USA. For the period of her stay in India, she has offered the income as taxable in India. The portion of income shown as earned in USA has been shown as “exempt income” in India. The Assessing Officer, however, disallowed the assessee’s claim of “exempt income” and has taxed the income accrued to the assessee in USA also as part of income exigible to tax in India. Therefore, her entire salary income for the year; including that earned abroad, has been taxed in India for the reason that she did not furnish Tax Residency Certificate (‘TRC’) from USA and also did not furnish any proof of her stay in the USA. On appeal, the CIT(Appeals) – 12, Bangalore, after issuing notices to the assessee, conducting hearings and taking the assessee’s submissions on record, disposed the appeal vide order dt. 31.10.2017 granting relief to the assessee by relying on the decision of the jurisdictional High Court of Karnataka in the case of DIT Vs. Prahlad Vijendra Rao (supra) and the co- ordinate bench of the jurisdictional Tribunal in the case of ITO Vs. Bholanath Pal (supra).
5.4.2 However, another appellate order has been passed by CIT(Appeals) – 10, Bangalore on the very same assessee for the same assessment year on the same appeal vide order dt.28.2.2018. In the said order the CIT(Appeals) – 10, has upheld the action of the Assessing Officer in treating the income accrued in USA as taxable in India. Thereupon, the assessee filed a letter dt.14.5.2018 before the CIT(Appeals) – 10 (copy placed on page 9 of the Paper Book) informing him that the matter had already been adjudicated and the appeal order passed by the CIT(Appeals) – 12, Bangalore on 30.10.2017. While the assessee did not receive any response from the CIT(Appeals)-10, the assessee received a letter dt.7.6.2018 from the CIT(Appeals) – 12 seeking to treat her order dt.31.10.2017 as invalid as she did not have jurisdiction over the appeal for Assessment Year 2013-14 (copy furnished at page 7 of Paper Book).
5.4.3 It was in the context of the above factual matrix that the present appeal has been filed. I find that the order passed by the CIT(Appeals) – 12, Bangalore dt.31.10.2017 is a reasoned and speaking order, considering the Assessing Officer’s view, the assessee’s submissions and the legal precedents and pronouncements on the subject. This order dt.31.10.2017 cannot be wished away merely because of a Departmental Administrative Order of the Pr. CCIT transferring the appeal for this particular Assessment Year 2013-14 from the CIT(Appeals) – 12, Bangalore. It is not the case of Revenue that the order of the CIT(Appeals) – 12, Bangalore dt.31.10.2017 was perverse OR made on a wrong factual or legal premise. The mistake was either on the part of the CIT(Appeals) – 12, Bangalore in not implementing the order of the Pr. CCIT, Bangalore OR it is of the Pr. CCIT, in not communicating the order of transfer. Either way, it was the solely the mistake of the officers of the Department and the assessee should not suffer hardship and harassment due to the same. The fact of the matter, in the case on hand, is that when the CIT(Appeals) – 10, Bangalore passed the impugned ex-parte order dt.28.2.2018, the order of the CIT(Appeals)-12, dt.31.10.2017 was very much in existence; even up to 12.6.2018 when it was sought to be invalidated by CIT(Appeals)-12, herself by way of rectificatory action under Section 154 of the Act. In my considered view, after taking into account the factual and legal matrix of the case as discussed above, there cannot be two appellate orders of two different CIT(Appeals) on the same appeal at the same time on the very same assessee and therefore, obviously, the subsequent order of the CIT(Appeals) – 10, Bangalore dt.28.2.2018 is not a valid order in the eyes of law.
5.4.4 Further, in my view, the order passed by the CIT(Appeals)-12, Bangalore dt.31.10.2017 for Assessment Year 2013-14 cannot be negated by invoking the provisions of Section 154 of the Act. It is evident that under Section 154 of the Act, there is no specific power conferred to Revenue authorities to recall an order or deem an order as invalid. Sec. 154 of the Act only provides for awarding of a mistake apparent from the face of the record. Therefore, the attempt by the CIT(Appeals)-12 to invoke the provisions of Sec. 154 of the Act to deem her order dt.31.10.2017 as invalid is not tenable. In this view of the matter, the impugned order of the CIT(Appeals)-10 dt.28.2.2018 is liable to be quashed on grounds of non-maintainability.
5.4.5 I also find merit in the submissions of the assessee that the CIT(Appeals) – 12, Bangalore in her order dt.31.10.2017 has passed a reasoned order placing reliance on the decisions of the Hon’ble jurisdictional High Court (supra) and of co-ordinate bench of ITAT, Bangalore (supra) and therefore remanding the issue back to the file of the CIT(Appeals) – 10 would serve no useful purpose, other than cause hardship to the assessee. It is seen that the assessee had submitted the details of her stay abroad, by furnishing details of passport and visa to the Assessing Officer as well as details of taxes paid and tax returns filed in the USA. This issue has been considered and explained in the decision of the co-ordinate bench of this Tribunal in the case of Bholanath Pal in ITA No.10/Bang/2011 dt.30.5.2012; wherein on similar facts, where an employee is sent on deputation to a foreign country, the co-ordinate bench at paras 12.6 to 12.9 thereof has held as under :-
12.6 The provisions of section 5(2) start with the expression “subject to the provisions of this Act”. Hence, the provisions of section 5(2) are subject to other provisions contained in the Act and other provisions of the Act will have significant impact on the interpretation of section 5(2). Reference is made to “The Law and Practice of Income Tax” by Kanga, Palkhivala and Vyas (VoL-I, Ninth Edition, page 311). Reference is also to the following judgements :–
CIT v. Nippon (1998) 233 ITR 158 (Calcutta) at page 162; CIT v. Khambaty (1985) 159 ITR 203 (Bom.) at pages 207-208.
12.7 As per section 15, salary is not taxable on receipt basis except in case of advance salary or arrears salary. Regular salary under section I5(i)(a) is taxable on accrual basis. Salary is accrued where the employment services are rendered. In the instant case, for the assessee, the normal place where and not in India- His visits to India are in connection with business and not for rendering employment sendee’s for any Indian entity. There is no employment agreement for having rendered any services for Indian entity. In the instant case, the salary accrues to the assessee in Japan and the accrued salary is partly delivered by Motorola India in India. Hence, there is no accrual of salary in India.
12.8 In terms of section 9(1) (ii) income chargeable under the head “salaries” under section 15 shall be deemed to accrue or arise in India if it is earned in India, i.e., if the services under the agreement of employment, are or were rendered in India. In the instant case, the employment services were entirely rendered outside India. Hence, the salary is not earned for rendering services in India. Therefore, salary for the entire year is not taxable. In this connection, reliance is placed on the following decisions :–
DIT (Intnl. Taxation) v. Prahlad Vijendra Rao., (2011) 198 Taxman 551 (Kar.)/(2on) 24 CTR Kar.) 107; Ranjit Kumar Bose v. ITO (1986) 18 ITD 230 (Calcutta ITAT); Sreenivas Kumar Sistla (AAR Na. 51401 2000).
12.9 For the aforesaid reasons, the salary which was received by the assessee for the services rendered in Japan for the period 1-4-2005 to 31-3-2006 is not liable to tax in India,
5.4.6 The facts of the case on hand are similar to that of the aforesaid case of Bholanath Pal (supra) and therefore the above findings are squarely applicable to the case on hand. The contention that the assessee did not furnish TRC and therefore it cannot be allowed the exemption is not correct. The furnishing of TRC is applicable only to cases where the benefits under the DTAA are claimed; as can be made out from a plain reading of Sec.90(1) of the Act. Further, in the decision cited by the learned Departmental Representative (supra), the Tribunal had held that absence of TRC cannot be a ground for denying the benefit of DTAA. It has only held that the assessee should furnish evidence for the claim of exemption. In the case on hand, the assessee has furnished evidence of her stay abroad in the year under consideration before the Assessing Officer and as the salary for services rendered did not accrue in India for that period of stay outside India, that salary income is not taxable in India. I, therefore, am inclined to agree with the assessee’s contention that the finding of the CIT(Appeals) – 12 in her order dt.31.10.2017 is based on application of sound principles to the facts of the assessee’s case and no useful purpose would be served by remanding the case to the CIT(Appeals)-10, Bangalore, as sought by the learned Departmental Representative. In view of the above, we hold that the addition made by the Assessing Officer to the salary income of the assessee is incorrect and the action of the CIT(Appeals)-10 in confirming the said addition ex-parte, without examining the facts and underlying principles of the case and judicial pronouncements in this regard is untenable and is therefore cancelled. Consequently, the grounds raised by the assessee are allowed.
6. Ground No.12.
6.1 In this ground (supra), it has been stated that the CIT(Appeals) has erred in not taking cognizance of the fact that the residential property was let out only for part of the year. This ground is apparently related to the addition of Rs.5,541 made by the Assessing Officer while computing the assessee’s ‘Income from House Property’. The Assessing Officer has not discussed the addition in the body of the order of assessment. The CIT(Appeals)-12, Bangalore in order dt.31.10.2017 has examined the issue and held that the assessee did not furnish any evidence to show that the House Property was let out only for a part of the year under consideration and therefore sustained this addition. Before us also, neither has any evidence in this regard been brought on record nor any arguments urged on this issue. In the absence of any evidence being put forth by the assessee, I find no merit in this ground raised by the assessee and consequently dismiss Ground No.12.
7. In the result, the assessee’s appeal for Assessment Year 2013-14 is partly allowed.
Order pronounced in the open court on the 31st day of Oct., 2018
