Manikandan Rajapackiaeswaran Vs ACIT (ITAT Chennai)
Assessee is an individual who was deputed to Norway for a short duration of 3 months & received salary on which TDS was paid to the Norwegian Government. Assessee filed his return of income in India for AY 2016-17 but did not report salary received in Norway. AO invoked Black Money Act for AY 2022-23 although the alleged income pertains to AY 2016-17 & ACIT initiated proceedings u/s 10(2) of BM Act & treated Norwegian salary as “undisclosed foreign income & asset” u/s 3(1).
On appeal before the Tribunal, assessee submitted that BM Act applies only where there exists an undisclosed asset located outside India or income chargeable to tax in India that remains undisclosed. In the present case, no foreign asset was identified, nor was any income chargeable to tax in India was undisclosed, as salary earned in Norway is taxable in Norway as per India-Norway DTAA. He further submitted that proviso to section 3(1) applies only to undisclosed assets, not to income, & therefore invoking AY 2022-23 is wholly without jurisdiction.
Tribunal held that, as per Article 16(1) of the India–Norway DTAA, “salaries derived by a resident of a Contracting State in respect of employment shall be taxable only in that State unless the employment is exercised in the other Contracting State.” In the present case, employment was exercised in Norway & tax was duly deducted there. Hence such income is exempt from tax in India by virtue of section 90(2) of IT Act read with DTAA.
