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2015 (3) TMI 650 - MADRAS HIGH COURT

2015 (3) TMI 650 - MADRAS HIGH COURT - [2015] 373 ITR 326 (Mad) - Taxability of the gross total income - assessee has not paid any federal tax in USA as evidenced by the W-2 furnished by the assessee for the FY 2008-09 - whether Tribunal was justified in not adopting the grossing up concept in respect of the assessee's Indian taxes borne by the employer in reference to Section 17 (2) (iv) r/w Section 192 (1B)? - Plea of the Revenue that there is no specific indication as to what is the gross tot .....

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assessee in India. Taking into consideration the amount paid towards salary and deducting the hypothetical tax payable in the US,the Tribunal has determined the salary received after deduction made by the employer towards the hypothetical tax. A cursory look at the above calculation made by the Tribunal would reveal that the computation is just and proper and no clarification is required to be given by the Tribunal, as it is for the assessee to explain as to how this amount should be treated for .....

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adjudicating the taxability of the gross total income, when the assessee has not paid any federal tax in USA as evidenced by the W-2 furnished by the assessee for the FY 2008-09? 2) Whether on the facts and circumstances of the case the Income Tax Appellate Tribunal was justified in not adopting the grossing up concept in respect of the assessee's Indian taxes borne by the employer in reference to Section 17 (2) (iv) r/w Section 192 (1B) of the Income Tax Act, 1961? 2. The facts, in a nutshe .....

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USA. It is accepted by the Department that in lieu of the amount withdrawn as hypothetical tax, the employer/company paid the tax liability of the assessee in India in a sum of ₹ 31,57,915/-. Consequent upon the payment of tax as above in India, there remains certain amount withdrawn by the company of the assessee from the salary, which has not been paid as tax in India, i.e., an amount of ₹ 8,55,320/-. The assessing officer held that the assessee has not paid any federal tax in USA .....

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nd allowed the appeal. Aggrieved by the order of the CIT (Appeals), the Revenue preferred appeal before the Tribunal. 3. The Tribunal considered the issue of computation of actual salary, and the same has been set out in detail in para-7 of the Tribunal's order in the following manner :- 7. The assessee has received in US $ amount equivalent to INR ₹ 1,10,75,021/- as salary on which an amount of Indian ₹ 40,12,145/- is withdrawn being hypothetical tax payable in US. In lieu for t .....

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cal tax as submitted by the representative of the assessee and held in para-8 of its order that there is a difference in tax to the tune of ₹ 8,55,320/-. A note has been appended by the authorised representative in the analysis of hypothetical tax stating that under the tax equalization policy, this difference of Indian ₹ 8,55,320/- is not eligible to be paid back to the assessee. In this view of the matter, the Tribunal, after coming to the conclusion, the formula as to how salary r .....

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ax has been paid in the country of residence, then rebate will be allowed in the other contracting State. It is further submitted by the learned counsel that the Tribunal failed to note that the assessee has not paid any federal tax in USA as could be seen from the W-2 furnished by the assessee and, therefore, the entire gross salary received by the assessee has to be taxed. It is further submitted that the grossing up concept has not been adopted by the Tribunal. In view of the above infirmitie .....

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