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Case Law Details

Case Name : Debarghya Chattopadhaya Vs DCIT (ITAT Kolkata)
Appeal Number : I.T.A. No. 24/Kol/2023
Date of Judgement/Order : 09/02/2024
Related Assessment Year : 2014-15

Debarghya Chattopadhaya Vs DCIT (ITAT Kolkata)

Introduction: The case of Debarghya Chattopadhaya vs DCIT before the Kolkata ITAT delves into the eligibility of a taxpayer for Double Taxation Avoidance Agreement (DTAA) benefits. In this instance, the taxpayer possessed a tax residency certificate from the United Kingdom and offered taxes on income earned there. The ITAT ruled in favor of the taxpayer’s entitlement to treaty benefits under Section 90 of the Income Tax Act.

Detailed Analysis: The appellant, a non-resident Indian, received salary income from IBM India Pvt. Ltd. while working in the United Kingdom. Despite not filing a tax residency certificate before the Assessing Officer (AO), the taxpayer argued for relief under DTAA. The AO denied the claim due to the absence of the tax residency certificate.

However, during the appeal process, the taxpayer submitted the tax residency certificate issued by HM Revenue and Customs, UK. The AO, in a remand report, acknowledged the validity of the certificate and accepted the taxpayer’s claim for DTAA benefit. Despite this, the Commissioner of Income Tax (Appeals) (CIT(A)) failed to allow the ground of appeal.

Upon review, the Kolkata ITAT recognized the taxpayer’s possession of the tax residency certificate for the relevant period. Since the taxpayer had already offered taxes in the United Kingdom for the fiscal year in question, the ITAT concluded that the taxpayer deserved DTAA benefits under Section 90 of the Act. Consequently, the ITAT set aside the CIT(A)’s findings and deleted the addition to the taxpayer’s income.

Conclusion: The Debarghya Chattopadhaya vs DCIT case highlights the significance of tax residency certificates and the entitlement of taxpayers to DTAA benefits. By possessing a valid certificate and offering taxes in another contracting state, taxpayers can avail themselves of treaty benefits, ensuring avoidance of double taxation and promoting international tax compliance. The Kolkata ITAT’s decision reaffirms the importance of honoring treaty obligations and upholding the rights of taxpayers under relevant tax treaties.

FULL TEXT OF THE ORDER OF ITAT KOLKATA

This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-22, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 21.11.2022 for the AY 2014-15.

2. The assessee has raised following Grounds of appeal:

1. For that on the facts of the case the Ld. CIT(A) was not legally justified in sustaining the addition of Rs. 50,75,797/-,as salary income (taxable in India), when the entire income has been subjected to taxation in UK, and the appellant was an NRI and has claimed relief under DTAA supported by Tax Residency Certificate, and appellant has already paid the due taxes thereon in UK, the addition wrongly made may please by deleted.

2. For that on the facts of case the remand report and the tax residency certificate issued by UK authorities, has been ignored and the claim of the appellant has been disallowed, without considering the assessment records of earlier years, wherein identical situation the relief under DTAA, has been allowed in full.

3. For that the appellant craves leave to add, alter, amend any further grounds of appeal before or at the time of hearing.

3. At the outset, the Counsel for the assessee submitted that the assessee is a non-resident Indian and claimed relief under DTAA. Due to non filing of tax residency certificate before the AO, the salary income of Rs. 50,53,221/- and interest income of Rs. 22,576/- has been held to be taxable. He further submitted that the Ld. CIT(A) also did not consider the tax residency certificate furnished before him and confirmed the view taken by the AO.

4. On the other hand, the D.R supported the order of lower authorities.

5. We have heard the rival contentions and perused the records placed before us. We note that the assessee is admittedly a non-resident Indian and received salary from IBM India Pvt. Ltd. while working in United Kingdom. The appellant is a tax resident in United Income at Rs. Nil declared in the e-return for AY 2014-15 electronically furnished on 21.07.2014. After the case was selected for scrutiny through CASS and notice was issued u/s 143(2) and 143(1) of the Act. The Ld. AO called for various details about the income earned during the year. We notice that the assessee received salary of Rs. 50,53,721/- from IBM India Pvt. Ltd. he was sent to United Kingdom for short term foreign assignment. The salary income of Rs. 50,53,221/- and interest income of Rs. 22,576/- was not offered to tax in India on the ground that the assessee is a non-resident Indian and taxed on his total income in the country of residence. The ld. AO denied the claim because the assessee failed to furnish a tax residency certificate from United Kingdom which is required in order to claim DTAA benefit u/s 90 of the Act. Further we notice that the assessee carried the matter before the Ld. CIT(A) and placed the copy of tax residency certificate of United Kingdom. Since this document was filed for the first time the Ld. CIT(A) called for a remand report. In the remand report dated 17.08.2022, the AO accepted that copy of tax residency certificate has been received on 31.08.2017 and the same was issued by HM Revenue and Customs, UK in which it was declared that the assessee was a resident of the UK during the period from 06.04.2013 to 05.04.2014. The Ld. AO also stated in the remand report that claim of DTAA benefit of the assessee is valid and therefore the salary income received for the work during stay at United Kingdom is exempt. The Ld. CIT(A) called for a report from Ld. CIT(A)-OSD(IT) Range-2, Kolkata but the fact mentioned by the AO in the remand report stood uncontroverted. Surprisingly Ld. CIT(A) has still not allowed the ground of appeal. Before us, the Ld. Counsel for the assessee has placed reliance on the evidences and after considering the same and also the remand report issued by the AO , we are inclined to hold that the assessee possesses tax residency certificate of United kingdom for a period from 06.04.2013 to 05.04.2014 and the instant year under the appeal pertains to FY 2013-14 and therefore since the assessee has offered to tax for the year in United kingdom, assessee deserves DTAA benefit u/s 90 of the Act. Thus the claim made by the assessee is found to be correct. We therefore set aside the finding of Ld. CIT(A) and delete the addition of Rs. 50,53,221/-. Accordingly ground of appeal raised by the assessee are allowed.

4. In the result, the appeal filed by the assessee is allowed.

Order is pronounced in the open court on 9th February, 2024

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