TMI Blog2015 (4) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... are also received in the USA. Hence, it cannot form part of income taxable in India as per Section 5. Mutually exclusive to this argument, we can apply the same rationale of the earlier ground (i.e, interpretation of Article 16(1)) can be applied too applying the 'exemption regime' for the impugned year and hence even under this view the per diem cannot be brought to tax in India. - Decided in favour of assessee. - ITA No.310/Hyd/10 - - - Dated:- 17-4-2014 - B.RAMAKOTAIAH AND SMT. ASHA VIJAYARAGHAVAN, JJ. For the Appellant : S. Ravi. For the Respondent : Smt. K. Haritha. ORDER:- PER : Smt. Asha Vijayaraghavan, J. This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals) II, Hyderabad dated 14.12.2009 for the assessment year 2002-03. 2. Brief facts of the case are that the assessee, an individual on the pay rolls of M/s. Motorola India Electronics Ltd., Bangalore as a Software Engineer, filed his return of income for the assessment year 2002-03, declaring a salary of ₹ 99,245 and claiming refund of ₹ 1,90,997. The assessee claimed his status as that of a non-resident on the ground that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xation relief in respect of tax paid in USA of ₹ 4,46,814 as per provisions of Article 25 of DTAA, and accordingly completed the assessment vide order dated 21.3.2005 passed under S.143(3)(i) of the Act. 4. On appeal CIT(A) confirmed the assessment made as above, rejecting the contentions of the assessee, with regard to his residential status; for relief under Article 16(1) of the DTAA; and relief in tax in terms of Article 25 of the DTAA, and accordingly dismissed the appeal of the assessee. 5. Aggrieved, assessee is in second appeal before us. 6. Though as many as seven grounds of appeal have been raised, there are only five effective grounds which read as follows:- 1. 2. That on the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the action of the Assessing Officer in denying exemption from Indian income tax, salary income of the appellant amounting to ₹ 6,73,431, under Article 16(1) of the Double Taxation Avoidance Agreement between India and USA read with section 90(2) of the Income Tax Act, 1961. 3. That the Learned CIT(A) erred in upholding the action of the Assessing Officer in levying to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Article 25 of the DTAA between India and USA for an amount of ₹ 4,46,814. 9. The Learned Departmental Representative, on the contrary has relied on the orders of the Revenue authorities. 10. We heard both parties and perused the material available on record. Assessee's contention in Ground 2, relates to the salary income received in India of ₹ 8,03,276, out of which an amount of ₹ 6,73,431 relates to income earned while working in the USA and which has been offered to tax in the USA. The short point of the assessee is that an interpretation of Article 16(1) would lead to the conclusion that taxation rights for the salary earned for work done in the USA vests only with USA and that amount cannot be considered for Indian tax purposes - in other words this is the 'exemption' regime (as opposed to 'credit' regime) under the DTAA. For this, the assessee placed reliance on the decision of the Supreme Court in CIT v. P.V.A.L. Kulandagan Chettiar (2004 267 ITR 654 SC). 11. Article 16(1) of the Indo-US Double Taxation Avoidance Agreement reads as follows: Article 16 - Dependent personal services - 1. Subject to the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Government of any country outside India for granting relief of tax or as the case may be, avoidance of double taxation, provides that any income of a resident of India may be taxed in the other country, such income shall be included in his total income chargeable to tax in India in accordance with the provisions of the Income-tax Act, 1961 (43 of 1961), and relief shall be granted in accordance with the method for elimination or avoidance of double taxation provided in such agreement.' 15. With the insertion of S.90(3) and the subsequent Notification referred to above, it is clear that the 'exemption' regime sought by the assessee cannot come into play. However, the fact is that the Notification cannot apply for the impugned assessment year, viz. 2002-03, as even if the Notification were said to be clarificatory it could be retrospectively applicable only from assessment year 2004-05 onwards when Section 90(3) was introduced. We see a similar view taken by the Mumbai Bench of the Tribunal in the case of Essar Oil Ltd. v. ACIT (ITA No. 2428/Mum./2007, ITA No.2442/Mum./2007 wherein it was held that the Notification No.91 of 2008 was clarificatory and applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
