Case Law Details
ITO Vs Mani Rajesh (ITAT Chennai)
Conclusion: Salary received by a Non-Resident of India (NRI) in India by exercising employment in Singapore should not be taxed in India as assessee would be entitled for the benefit of Article 15 of relevant DTAA which provided that the salary would be taxable in the country wherein the employment was exercised and the same would be subject to verification by AO that this income had already been offered to tax in Singapore and assessee had paid due taxes. AO would also verify that no credit of Taxes paid in India had been taken by assessee in Singapore.
Held: Assessee was a salaried employee with M/s. Master Card India Service Pvt Limited and was sent to Singapore on a long-term international assignment. During this period, the salary was paid by Indian employer and he remained on the payroll of the Indian Employer. Assessee received a gross salary of Rs.445.88 Lacs which was not offered to tax in India on the ground that no part of the services was rendered in India and the salary so received by him was already offered to tax in Singapore. AO upon combined reading of Article 15 and Article 25, held that Double Taxation Avoidance Agreements (DTAA) relief was to be given by the resident country. Assessee was a resident of Singapore, and being nonresident in India, assessee was not eligible for relief under Article 15 of the treaty. Accordingly, the salary so received by assessee was brought to tax. It was held that assessee was employed with Indian entity but sent on a foreign assignment. Thought the salary had been received in India for administrative reasons, the employment had been exercised in Singapore only. Assessee was non-resident in India and resident of Singapore which was evidenced by Tax Residency certificates as furnished by assessee. As the income had already been offered to tax in Singapore and assessee had paid taxes thereon and no credit of Tax paid in India had been taken in Singapore. On these facts, assessee would be entitled for the benefit of Article 15 of relevant DTAA which provided that the salary would be taxable in the country wherein the employment was exercised. The same would be subject to verification by AO that this income had already been offered to tax in Singapore and assessee had paid due taxes. AO would also verify that no credit of Taxes paid in India had been taken by assessee in Singapore.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by revenue for Assessment Year (AY) 2019-20 arises out of the order of learned Commissioner of Income Tax (Appeals)-16, Chennai [CIT(A)] dated 17-11-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 27-09-2021. The grounds taken by the Revenue read as under:
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