TMI Blog2006 (8) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... s during the relevant previous year was Not Ordinarily Resident (NOR). The assessee received salary amounting to Rs. 45,29,212 and bonus amounting to Rs. 9,83,246 totalling to Rs. 55,12,458 in the relevant previous year. He also was given rent-free accommodation and the perquisite value was determined at Rs. 9,23,558. The assessee spent 124 days outside India. Therefore, in the return of income, salary for 124 days, computed on proportionate basis, was excluded from the total income. In the course of assessment proceedings, it was pointed out that the assessee was employed as a news correspondent of NHK, Japan Broadcasting Corporation (NHK). As per terms of employment, between the assessee and the NHK, he was appointed bureau chief of Delhi office with effect from 18-7-1998. His main job was to gather news and reports and convey them to NHK. The employment terms also provided that NHK may assign him other duties from time to time. Therefore, it was argued that the income of the assessee for the period of his stay outside India was not taxable in India. However, the Assessing Officer did not accept this position. Her view was that his employment terms obligated him to look after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entical to the facts of this case. He referred to pages 12 and 13 of paper book-1 filed by the assessee, containing Assignment Terms, which describe the job functions of the assessee. These functions are reproduced below for the sake of ready reference: "(1) In connection with the news gathering of operations of NHK-Japan Broadcasting Corporation's News Bureau Office at New Delhi, the employee's duties may include, without limitation, the investigating, writing, preparing and reporting of news of the Southern Asia, including India and the neighbouring countries, for delivery on air, the direction and supervision of such news gathering; ensuring the effective and efficient operation of the Bureau; and such other services as NHK-Japan Broadcasting Corporation may expect from time to time in the ordinary course of duties. (2) However, the employee may be required by NHK-Japan Broadcasting Corporation to go on other assignments from time to time to any part of the world depending on exigencies and that further the employee may be reassigned to other News Bureaus of NHK-Japan Broadcasting Corporation at NHK-Japan Broadcasting Corporation's sole discretion. (3) Further the employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi and he was governed by fiscal laws of India. Therefore, in absence of any assignment to any other part of the world arising on any exigencies, the assessee continued to be employed in the Delhi office and his visits to other countries were incidental to his employment in New Delhi. 4.4 The learned DR referred to page-6 of the paper book which furnishes the details of the visits of the assessee outside India. For ready reference, the details are reproduced below: Summary of Number of days spent outside India for official purpose ---------------------------------------------------------- Travel dates Number of days Place From To outside India ---------------------------------------------------------- 2-5-2001 7-5-2001 4 Nepal ---------------------------------------------------------- 2-6-2001 17-6-2001 14 Nepal ---------------------------------------------------------- 12-9-2001 12-11-2001 60 Pakistan, US, UK ---------------------------------------------------------- 23-11-2001 30-12-2001 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs. The case of the learned DR on the basis of this decision was that the assessee was NOR during the year, all his activities were in relation to news gathering about South Asia from Delhi office. Therefore, the onus was on him to prove that visits outside India were independent of his duties in India. This onus has not been discharged. 4.7 The learned DR referred to the provision contained in section 9(1)(ii), under which salary, if earned in India, is taxable in India. Explanation below this section clarifies that salary for rest period or leave period which is preceded and succeeded by services rendered in India is also taxable in India. In this connection, the learned DR relied on the decision of the Hon'ble Uttaranchal High Court in the case of Reading and Bates Drilling Co. v. CIT [2005] 275 ITR 253. The Explanation to section 9(1)(ii) of the Act was a matter of interpretation by the Hon'ble High Court in that case. The facts were that after 35 days of hard work on the oil rigs, which was a hazardous job, a technician had to go back to a country of his residence. The off period followed the on period and both formed part of an integral scheme. The case of the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 5(2) uses the expression 'from whatever source derived'. The question whether the income accrued or arose in India is a question of fact, which has to be decided in the light of the commonsense and plain thinking. The authorities below and the High Court considered it a hard matter of fact that the income derived from broadcast of copyright music from stations of All India Radio, arose in India. Putting its seal of approval, the Hon'ble Court mentioned that in our opinion, this was a correct view to take and we find no reason to differ from it. The question was also raised whether income can be deemed to have accrued in India, however, the Court refused to go to the matter for the reasons that the income, in fact, accrued in India and no question arises whether it should be deemed to accrue or arise in India. The case of the learned DR was that the assessee was stationed at New Delhi for getting news from South Asia for NHK The visits in the neighbouring and far off countries were for the purpose of work assigned to the assessee in India and, therefore, the income accrued or arose in India as per decision of Performing Right Society Ltd.'s case. In the alternative, it was po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddressed to the Assessing Officer in which it was inter alia pointed out that provisions contained in section 5(1)(c) were not applicable to a NOR, the activities of the employer do not amount to any trade or business activity in India and, therefore, the entire salary received in respect of services rendered overseas is not liable to be taxed in India, since the assessee was required to render services outside India, as per terms of his assignment. 5.2 Coming to the legal issue, the learned counsel relied on the decision of the Hon'ble ITAT, Delhi Benches in the case of Dy. CIT v. Vivek Paul [2004] 2 SOT 799. In that case, the assessee, being foreign national and having the status of the NOR, contended that in terms of his employment he had to undertake journeys outside India and that that part of the salary accrued outside India. Therefore, the same was not liable to be taxed in India. The Hon'ble Tribunal held that the facts of the case were qualitatively different from the facts of the case of the Sedco Forex International Drilling Inc. v. CIT [2005] 279 ITR 310 (SC). In that case, the question was regarding the taxability of salaries paid for the off period. However, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers the Tribunal to call for additional evidence in case such evidence is required by it for deciding the case or for substantive justice. We find that the assessee had produced requisite evidence before the lower authorities which has been placed before us. The learned counsel wanted to place the Japanese version of the terms of assignment on record, but the language of the Tribunal is English. The English version has already been furnished to lower authorities and to us. Therefore, the plea of the learned counsel that the terms of assignment are not happily translated cannot be taken to be correct. Further, it also cannot be said that the certificate of the employer enclosed with the synopsis is a correct translation of the terms of assignment. In view thereof, we refuse to admit the additional evidence at this stage. 5.5 The case of the learned counsel was that overall control over the assessee was in Japan, where the NHK was located. As per the policies of the employer, the world was divided into different territories and New Delhi office was placed under NHK, Bangkok Bureau. Therefore, the control over the assessee was exercised from Japan through Bangkok office. We find n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own any rule regarding the situs of accrual of the income. This issue was examined by the Hon'ble Supreme Court in the case of Performing Right Society Ltd. and it was pointed out that the situs had to be determined on the basis of commonsense and plain thinking. In that case, the income of the assessee arising out of a contract executed outside India was held to accrue in India for the reason that its copyright music was broadcast from the stations of the All India Radio. Looking at the terms of assignment, the functions performed by the assessee in India and outside India were for the purpose of gathering news in South Asia and the impact of the events happening abroad on sociopolitical scenario in South Asia. The assignment terms obviously contained provision for gathering news from neighbouring countries which include Nepal, Pakistan and Afghanistan. The events in these countries have a direct bearing on India. However, events in USA and some other part of South East Asia also likely to have impact on India. The September 11, event had a very direct impact on India in terms of its relations with the USA in combating terrorism. Therefore, we are of the view that the travel abroa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee as Non-Resident (NR) and (ii) in holding that the salary and bonus received by him outside India is not taxable in India. 8. The learned DR fairly conceded that the correct residential status of the assessee is NR and therefore, ground No. 1 of the revenue's appeal does not survive. However, he pointed out that the provisions contained in section 5(2)(b) in case of a NR is identical with the provision contained in section 5(1)(b) in case of a resident or a NOR. It was further pointed out that the facts of this case are identical with the facts in the case of Asstt. CIT v. Hiromi Hirose [IT Appeal No. 4506 (Delhi) of 2003]. In this connection, he referred to page-13 of the paper book-I furnishing job functions etc. In this case, it was pointed out that the terms and conditions of job functions and taxes are identical with that case. Reference was also made to page-76 of the paper book-I, which furnishes the details of stay abroad for 182 days. The stay in Nepal was in connection with the assassination of King Birendera of Nepal, visit to Pakistan, UAE Afghanistan were in connection with the post 11-9-2001 developments. There were other stays in Vietnam, Thailand a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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