Case Law Details
Kanagaraj Shanmugam Vs ITO (ITAT Chennai)
ITAT Chennai held that as per Sec.9(1)(ii) of the Income Tax Act, salary income could be deemed to accrue or arise in India only if it is earned in India in respect of services rendered in India. Hence, salary income as accrued to the assessee for work performed in UK would not be taxable in India.
Facts-
The assessee admitted salary income of Rs.37.32 Lacs in the return of income filed on 25.06.2015. However, the return was revised on 26.05.2016 wherein the income was declared as ‘nil’ after claiming exemption under Article 16(1) of India-UK Double Taxation Avoidance Agreement (DTAA) and refund of Rs.9.73 Lacs was claimed. The Ld. AO show-caused the assessee as to why salary income of Rs.38.42 Lacs as reflected by assessee’s employer in Form 16 not be considered as total income of the assessee.
It transpired that the assessee was an employee of M/s Oracle Financial Services Software Limited (OFSSL). The assessee was sent on an assignment to UK for the period from 22.04.2014 to 21 .04.201 6. The salary for that period has been paid by OFSSL in India though the same was reimbursable by foreign counterparts. As per Form 16, the assessee received gross salary of Rs.39.85 Lacs. After claiming exemption u/s 10, the taxable salary amounted to Rs.38.92 Lacs.
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