Wednesday, March 30, 2016

Salary of NR for rendering service in US won't be taxed in India as per DTAA even if salary is received in India

Facts
a)  The assessee was transferred from Indian company to its American sister concern to act as a lead software engineer
b)  He left India on 30th May of relevant financial year in connection with his US employment. However, for internal facilitation, his salary for relevant period was paid by Indian company in India.
c)  Assessee filed his return claiming status of a non-resident and claimed his salary income as exempt from tax in view of Article 16(1) of the DTAA between India and USA.
d)  Assessing Officer (AO) held that since salary was received in India, the same would be taxable in India irrespective of his residential status.

e)  CIT(A) confirmed the order of the AO. Aggrieved by the order of CIT(A), assessee filed the instant appeal before the tribunal.

The tribunal held in favour of assessee as under-
1) The fact that assessee was non-resident in India in the relevant previous year was not disputed as same was accepted by AO. As far as applicability of Article 16(1) of India-USA DTAA is concerned, same depends on the country where services are rendered which were undisputedly in the USA in the instant case.
2) Therefore, the application of Article 16(1) could not be denied to assessee merely because the salary was received in India in view of the undisputed fact that no service was rendered by assessee in India.
3) Hence, salary received by non-resident for rendering services in USA couldn’t be taxable in India in terms of Article 16 of India-US DTAA even if salary was received in India- [2016] 67 taxmann.com 240 (Jaipur - Trib.)
Roman"'>  Assessing Officer (AO) held that since salary was received in India, the same would be taxable in India irrespective of his residential status.

e)  CIT(A) confirmed the order of the AO. Aggrieved by the order of CIT(A), assessee filed the instant appeal before the tribunal.
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