Prakash Raman Vs ITO (ITAT Chennai)
Salary for Services Abroad Not Taxable in India: Mere Receipt of Salary in India Doesn’t Trigger Tax if Services Rendered Overseas -ITAT Chennai Grants Relief u/s 90 & Article 16 of India-US DTAA-
India- US DTAA Protection Upheld: Salary Earned in USA Cannot be Taxed Again in India- ITAT Chennai Directs AO to Grant DTAA Benefit on Foreign Salary
In this appeal before the Chennai Bench of Tribunal, the Assessee, a non-resident employee deputed to the United States by Solvacy Specialities India Ltd., contested the taxability of salary income amounting to ₹1,31,04,562. AO had treated the said income as taxable in India on the ground that it was received from the Indian employer in India & Form-16 was issued with TDS deduction. AO rejected the claim for exemption under Article 16 of India-USA DTAA, holding that no valid US Tax Residency Certificate (TRC) was furnished & instead a TRC from Korea was on record.
CIT(A) confirmed the AO’s view, observing that the employment relationship remained with the Indian company, that salary was paid in India, & hence taxable u/s 5(2)(a) r.w.s. 15.
Before Tribunal, Assessee furnished additional evidence including a valid TRC from US authorities, USA tax receipt, W-2 form & copy of the India-US DTAA. Reliance was placed on earlier Chennai Tribunal decisions in Arumugam Rajasekar Vs ITO, Nathakumar Murugesan Vs ITO, Ramesh Kumar AE Vs ITO, Antony Samy Vs ITO, as well as Karnataka High Court in Prahlad Vijendra Rao, Calcutta High Court in Utanka Roy, Bombay High Court in Avtar Singh Wadhwan, & Supreme Court in P.V.A.L Kulandagan Chettiar. Assessee argued that salary accrues where services are rendered, i.e., outside India, hence taxable only in USA as per Section 9(1)(ii) & Article 16 of the DTAA.
