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2024 (2) TMI 1371 - ITAT DELHIIncome deemed to accrue or arise in India - Taxability of income in India - salary income earned by the assessee for services rendered in Ireland - assessee being non-resident and covered under Article 15(1) of India - Ireland DTAA - HELD THAT:- Despite the submissions and evidence on record, AO erred in incorrectly holding that the Assessee was based in India and that the salary was taxable in India, where infact the salary was earned from BA PLC, Ireland and the services were rendered outside India. DRP after perusing the documents submitted by the Assessee erroneously noted that there is a failure on the part of Assessee to provide agreement between Irish and Indian entity. Evidently, the ld. DRP failed to appreciate certificate / letter of reimbursement issued by BA PLC, Ireland substantiates the assessee's submission that during the impugned Assessment Year, the assessee was employed with BA PLC. Ireland and was paid salary in India merely for administrative convenience. Salary income of the Assessee was not exigible in India under Article 15 of the DTAA - AO was not correct in not granting relief under Article 15 of the DTAA and disregarding that income is accrued where employment is exercised. As per the Article 15 of the DTAA between India and Netherlands, the income earned by the person is exempt from tax if following conditions are satisfied - If the person has not stayed for more than 183 days in India, and If the employment is exercised outside India. In the present case, both the conditions prescribed in the Article 15 are satisfied. The first condition has not been disputed by the Assessing Officer, whereas the second condition has been justified by various evidences furnished by the assessee. The Assessing Officer himself in para 7 of the Assessment Order has accepted that the services were rendered outside India. Therefore, it is hereby held that the assessee was a residing and exercising employment in Ireland under the complete control of BA PLC, Ireland for the impugned Assessment Year. Further, the salary was also borne by BA PLC, Ireland. Thus, the salary of the assessee derived from BA PLC, India on behalf of BA PLC, Ireland are duly considered exempt from tax in India. Salary income earned by the assessee for services rendered in Ireland cannot be said to be deemed to accrue or arise in India under section 9 of the Act - if the services are rendered outside India, for which salary has been paid, then the income cannot be said to accrue or arise in India. The contention of AO that the assessee rendered services from India in incorrect in light of the tax residency certificate for Ireland. The assessee for the year under consideration was a tax resident of Ireland - since the employment was not exercised in India, such income cannot be held to be taxable in India and hence, the addition made by the AO on this issue is hereby directed to be deleted. - Decided in favour of assessee.
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