TMI Blog2015 (1) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... red in USA. To substantiate such claim assessee has also submitted before the A.O. a working showing the details of stock amount granted. A perusal of the working, a copy of assessee’s paper book, reveals assessee has furnished all details relating to stock award granted, date of grant, date of vest of stock amount, total period between grant date and vest date, no. of days present in India between the grant date and vest date etc., Through this working assessee has also demonstrated the perquisite value of stock award which can be apportioned towards services rendered in India, depending upon the number of days stayed in India. As it appears, these facts and figures have not at all been examined by the Assessing Officer. Ld. CIT(A) has also not examined this issue with the attention it deserved. The order of the Ld. CIT(A) is non-speaking and bereft of any reasoning. When the residential status of the assessee is accepted as ‘not ordinarily resident’, income which accrues or arises to him outside India cannot and should not form part of the total income, unless the other conditions of proviso to section 5(1) are satisfied. Moreover, section 9(1)(ii) also makes it clear, income u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of an amount of ₹ 30,46,287 - Held that:- Neither the A.O. nor the learned CIT(A) have decided the issue with reference to evidences brought on record by the assessee. Accordingly, we consider it appropriate to remit this issue back to the file of the A.O. for deciding afresh after affording reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. - ITA.No.220/Hyd/2014 - - - Dated:- 21-1-2015 - SHRI B. RAMAKOTAIAH AND SHRI SAKTIJIT DEY, JJ. For The Appellant : Mr. Sanjiv Chaudhary For The Respondent : Mr. Rajat Mitra ORDER PER SAKTIJIT DEY, J.M. This is an appeal by the assessee against the order dated 31.10.2013 passed by the learned CIT(A), Hyderabad pertaining to assessment year 2007-08. 2. Briefly stated, assessee an individual is employed with M/s. Microsoft India (R D), Hyderabad. For the assessment year under consideration assessee filed its return of income on 19.03.2008 declaring total income of ₹ 2,25,66,227 under the head Salary . Assessee filed the return as Resident but not ordinarily Resident . On verification of information available on record, the A.O. notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee the then was between August, 2002 and September, 2005. It was submitted that these stock awards were received by the assessee in his U.S. brokerage account and pertains to the services rendered by him in USA and India. It was submitted that assessee was not ordinarily resident in India during the F.Y. 2006-07 and accordingly, the taxable portion of stock awards has been computed based on the period of his services in India between the date of grant and vest and the portion of stock award pertaining to his services in USA has been claimed as exempt. In support of such claim, assessee submitted the details of his stay in India during the seven previous year preceding financial year 2006- 07 and also relied upon the provisions of Income Tax Act as well as Indo-USA DTAA to claim that in case of a person who is not ordinarily resident, only the income accruing or arising in India can be taxable in India in terms of section 5(1)(c.) and section 9(1) (ii) of the Act. The assessee also submitted that according to the provisions of the Act and Indo-US DTAA the assessee has computed his income by taking into account the taxable income which accrued and arose in India. The A.O. though a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order so passed, assessee preferred an appeal before the learned CIT(A). However, learned CIT(A) passed the impugned order confirming the additions made by the Assessing Officer. Being aggrieved of the order passed by learned CIT(A) assessee is in appeal before us, raising the following grounds: 1. On the facts and in circumstances of the case and in law, the Learned Commissioner of Inco e Tax (Appeals)-V, Hyderabad [hereafter referred to 'Ld. CIT(A)], has grossly erred in confirming the entire addition of ₹ 1,80,27,000 made by Learned Income Tax Officer, Ward 12(2) Hyderabad ('Ld. AO') under section 143(3) read with section 147 of the Act by passing the impugned on-speaking order (dated 31st October 2013) without considering and discussing the factual and legal submission made by the appellant. 2. On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that Ld. AO, while admitting that the assessee was Not Ordinary Resident during subject Assessment Year, has wrongly held that the provisions of the section 5(1)(c) and section 9(1)(ii) of the Act are not applicable to the appellant. 3.(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 742,181 under section 234B of the Act. 7. The Appellant craves leave to add, amend and/or alter the above ground of appeal, at any time before or at the time of hearing of the appeal. The aforesaid grounds of appeal are independent of and without prejudice to one another. Any consequential relief, to which the appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, may be thus granted. 6. As can be seen, ground No.7 is a general ground. Hence, does not require any specific adjudication. In Ground No.1 the assessee has raised the issue of the impugned order of the learned CIT(A) being a non-speaking order. Learned A.R. though raised the issue but he hastened to add that for that reason alone he does not want the matter to be again remitted back to the Ld. CIT(A) and requested for disposal on merits. 7. So far as the next issue in Ground No. 2 and 3 are concerned, they relate to the addition of ₹ 1,49,80,713. The learned A.R. more or less reiterating the submissions made before the departmental authorities contended that as per section 6(1) a person is said to be a resident in India in case he is in India for 180 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned towards services rendered in India can be taxable in India. The learned A.R. submitted that even as per Article 16(1) of Indo US DTAA salary derived by a resident of USA in respect of an employment exercised in USA shall be taxable only in USA. It was submitted that since the stock option is derived from employment exercised in both USA and India, the income derived there from has to be apportioned accordingly. The learned A.R. submitted that as per Microsoft, USA Stock Award Scheme, stock awards granted to the employee vests over the specified vesting period ranging from 3 years to 5 years. Accordingly, the stock award income is earned over the vesting period i.e., from the date of grant to date of vest. It was submitted, the stock awards which vested with assessee during assessment year 2007-08 were granted by Microsoft, USA between August, 2002 to September, 2005. This stock awards were received by the assessee in his brokerage account in USA and pertains to his services rendered in the USA as well as in India. Therefore, in view of assessee s residential status of not ordinarily resident for the assessment year 2007-08, the taxable portion of the stock award income in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C/o. Air France, of ITAT, Delhi G Bench, New Delhi, ITA.No.1175/Del/2005 dated 15th February, 2008. 8. The learned D.R. on the other hand, relying upon the reasoning of the Assessing officer submitted that when there is no dispute to the fact that the assessee has received the amount in question in India, and the employer has also treated it as part of salary and deducted tax at source, the assessee s claim that a portion of the said income arose in USA hence, not taxable in India cannot be accepted. 9. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. We have also carefully examined the decisions cited by learned A.R. From the facts and materials on record it is clear that out of total FMV of stock awards of ₹ 1,49,80,713, the assessee himself accepts that an amount of ₹ 1,05,62,088 is attributable towards services rendered in India, hence, taxable in India. Therefore, dispute remains with regard to an amount of ₹ 44,18,625 which the assessee claims to be in relation to services rendered in USA, hence, not taxable in India as assessee s residential status is not ordinaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... status of assessee as not ordinarily resident. Therefore, we have to examine whether the amount of ₹ 44,18,625 relating to stock awards can form part of total income as per section 5(1). As can be seen from facts on record, prior to his joining Microsoft India (R D) P. Ltd., on 01.01.2004, assessee was an employee of Microsoft Corporation, USA and was a non-resident. While, he was employed with Microsoft, USA assessee was granted stock awards as per stock awards scheme of Microsoft USA. As per the scheme, stock awards granted to assessee between August, 2002 and September, 2005, amounting to ₹ 1,49,80,713 vested with the assessee during previous year 2006-07 relevant to assessment year under dispute. It is the claim of the assessee that out of stock amount vested of ₹ 1,49,80,713, an amount of ₹ 1,05,62,088 was attributable to services rendered in India and ₹ 44,18,625 is relatable to services rendered in USA. To substantiate such claim assessee has also submitted before the A.O. a working showing the details of stock amount granted. A perusal of the working, a copy of which is at page 49 of assessee s paper book, reveals assessee has furnished all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... salary in the TDS certificate issued in Form No.16 issued by employer, for that reason alone, it cannot be concluded that the entire stock amount is taxable in India. The information submitted by the employer under section 133(6) in letter dated 10.03.2009 also does not conclusively prove that amount received under SOTP is entirely relatable to services rendered in India. The employer has only stated that the stock awards proceeds were received by the assessee in India. Rather, in the aforesaid letter the employer has clarified that stocks were allotted to assessee when he was under employment of Microsoft Corporation, USA. Further, assessee sold the stocks to broker appointed by Microsoft, USA in the year 2003. Assessee only received the final installment of SOTP sales in financial year 2006-07. Therefore, without ascertaining how much of the SOTP is attributable to services rendered in India, the entire amount cannot be made taxable only because the money was received in India. Therefore, we are of the view that the assessee having residential status of not ordinarily resident , only that portion of the stock awards and SOTP attributable to services rendered in India can form pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.5, assessee has challenged addition of an amount of ₹ 30,46,287. 13. Briefly the facts are, during the assessment proceedings, A.O. noticed that as per ICICI Bank statement, total credits are to the tune of ₹ 1,80,76,000. Whereas, as per Form No.16, amount shown is ₹ 1,50,29,713 giving rise to a difference of ₹ 30,46,287. Though, assessee stated that the amount does not represent income either under the head Salary or any other head but only in the nature of remittances through banking channel, A.O. rejecting the explanation of the assessee added the said amount. Ld. CIT(A) also confirmed the addition. 14. Learned A.R. submitted before us amounts credited to the ICICI Bank account are in the nature of mere remittances to India through normal banking channels from assessee s post tax savings located in USA and does not represent any income taxable in India during A.Y. 2007-08. In this context, learned A.R. relied upon the certificates issued by ICICI Bank, copies of which are at pages 119 and 120 of assessee s paper book. 15. Learned D.R. supported the findings of A.O. and CIT(A). 16. Having heard the parties and perused the materials on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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