JCIT (OSD)(IT) Vs Rahul Rajnikant Parikh (ITAT Mumbai)
Interest income need not to be assessed when assessee is a Non-resident
The Income Tax Appellate Tribunal, Mumbai (“the ITAT”) in the case of JCIT v. Rahul Rajnikant Parikh [I.T.A. No. 638,639,640/Mum/2022 dated October 20, 2022] held that the interest income need not be assessed when assessee is a Non-resident.
Facts:
Rahul Rajnikant Parikh (“the Respondent”) was a Non- resident under Income Tax Act, 1961 (“the IT Act”). It came to the notice of the Government that the Respondent had a bank account, which he was operating jointly in HSBC Bank, Geneva. It was noticed that some deposits have been made in this bank account during the years relevant to Assessment Years (“A.Y.”) 2003-04 & 2004-05. In the three next A.Y. namely 2006-07 to 2008-09 interest has been credited on the deposits so made in the above said bank account.
In the first round, the deposit amounts as well as interest income accrued on the above said deposits were assessed in the hands of the Respondent dividing the same equally. The additions were made of Rs. 89,197, Rs. 99,284 and Rs. 150,139 respectively for the three A.Y respectively. These assessments were challenged by the Respondent before the Commissioner of Income-Tax (Appeals) (“CIT(A)”) who deleted these additions.
The Revenue department (“the Appellant”) then filed an appeal before the ITAT challenging the order of CIT(A) of deletion of the additions. The ITAT restored the matter and sent back the file to the Assessing Officer (“A.O.”) with the direction to make further investigation into the source of deposits made into the bank account. The AO assessed the interest income on the hands of the Respondent on the grounds that interest income shall be “deemed to have accrued” as per Section 9 of IT Act to the Respondent in India since the corresponding deposit amount has been assessed in the hands of the Respondent in A.Y. 2003-04 & 2004-05.
Issue:
Whether the interest income can be assessed in the hands of a Non-resident from deposits made in a Foreign bank?
Held:
The ITAT held as under:
