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2016 (8) TMI 364 - ITAT MUMBAI

2016 (8) TMI 364 - ITAT MUMBAI - TMI - Taxability of income in India - overseas income i.e. interest income, dividend income and capital gain - Held that:- In CIT vs. P.V.A.I. Kulandagan Chettiar [2004 (5) TMI 8 - SUPREME Court] Hon’ble Supreme Court held that the assessee not having permanent establishment in India are Not assessable in India. Thus CIT(A) was justified in applying the provision of Indo-US Tax Treaty The fact that income was derived outside India is not disputed by AO, thus the .....

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tax so borne is a non-monetary transaction and the same is exempted u/s 10(10CC) of the Act, and further relied upon the judgment of Delhi High Court in case of Balmukund Acharya in [2008 (12) TMI 88 - BOMBAY HIGH COURT ] and held that ground/claim raised before the AO was maintainable and allowed the benefit of section 10(10CC). It is well settled law that assessee is entitled to raise not only additional legal submission before the appellate authorities, but also entitled to raise additional .....

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- Held that:- This ground is directly linked with the ground No.1 raised in the present appeal which we have already decided against the Revenue and in favour of assessee holding that the foreign income to the assessee is not taxable in India. Hence the expenses relating to earning to the foreign income does not require any adjudication. Hence, this ground of appeal is also having no merit and the same is dismissed.- Decided in favour of assessee - ITA No. 6045/Mum/2010, Cross Objection No. 1 .....

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red in excluding the overseas income i.e. interest income (Rs.3,28,765/-) dividend income (Rs.9,60,167/-) and capital gain (Rs.l,18,798/-) as taxable income in India. 1a. On the facts and in the circumstances of the case and in law, while deciding the question 1 above the CIT(A)'s failed to appreciate that the assessee is resident and ordinarily resident of India as also confessed by him before the A.O. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in g .....

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activity. 3b. Further the CIT(A)'s failed to appreciate that the assessee had already got the benefit by way of indexation while determining the long term capital gain. 4. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the AO restored. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary. 2. The assessee raised the following Grounds in his cross objection: The respondent objects to the order dated 30 Apr .....

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ting the capital gains. The learned Additional Commissioner erred in holding that cost inflation index is not applicable on shares of foreign companies." 2. The learned Commissioner (Appeals) ought to have directed the Additional Commissioner to allow indexation benefits while computing capital gains. The learned Commissioner (Appeals) ought to have held that cost inflation index is applicable on shares of foreign companies. Expenses paid to broker in USA The learned Commissioner (Appeals) .....

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nder the head Income from Other Sources Foreign Tax credit 5. The learned Commissioner (Appeals) erred in not deciding the following grounds in the appeal: 8. The learned Additional Commissioner erred in not allowing claim of credit in respect of taxes paid in Germany and USA respectively. 9. The learned Additional Commissioner erred in holding that the appellant did not submit the documentary evidence in support of the claim of credit for the taxes paid in USA and in Germany. 6. The learned Com .....

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. The return of income was selected for scrutiny. During the course of assessment proceeding, the Assessing Officer (AO) asked the assessee to furnish details of stay in India to substantiate his status. The assessee contended in his reply that he was a non-resident and his claim of ordinary resident was wrong. After examining the detail of stay from the copies of Passport, the AO concluded that assessee is resident and ordinary resident . The assessee later on during assessment proceedings also .....

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38,04,684/- as income from salary and denied the benefit of tax paid in foreign country. 4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). In appeal the assessee was allowed exemption u/s 10(10CC) and also deleted the addition of capital gain and income from other sources. Aggrieved by the order of CIT(A), the Revenue has filed the present appeal before us. And the assessee filed the present C.O.in support of order of CIT(A). 5. First we shall take up the Grounds rais .....

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tional. The assessee is a resident of USA. His worldwide income is subjected to tax in USA. The assessee being an employee of Siemens AG, Germany and was on deputation of M/s Siemens Ltd. India during the relevant period. The return was inadvertently finalized on the basis of assessee resident but not ordinary resident in India. Accordingly, in return of income, the assessee offered salary income for tax, the assessee declared the income of ₹ 4,15,66,170/- and claimed a refund of ₹ 8 .....

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end income in USA and claimed deduction of ₹ 2,38,709/- in respect of expenses paid to broker in USA as these expenses were incurred for the purpose of earning dividend on share purchased in USA. 6. We have considered the rival contention of the parties and perused the material available on record. Article 4 of the Indo US Tax Treaty reads as under : 1. For the purposes of this Convention, the term resident of a contract in the state means any person who, under the laws of that state, is l .....

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st is subject to tax in that state as income of a resident, either in its hand or in the hands of its partner or beneficiaries, 2. Where by reason of the provisions of paragraph 1, and individual is a resident of both contracting state, then the status shall be determined as follows: (a) He shall be deemed to be a resident of the state in which he has a permanent home available to him; if he has a permanent home available to him in both the States; he shall be deemed to be a resident of the stat .....

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m, then competent authorities of the contracting States shall settle the question by mutual agreement. In the assessment proceedings the assessee claimed that he should be treated as non-resident under the Income-Tax Act, irrespective of his stay in India and relied upon the decision of Hon ble Supreme Court in case of CIT vs. P.V.A.I. Kulandagan Chettiar (2004) [(267 ITR 655(SC)]. However, the AO instead concluded that nowhere in Indo US Treaty, it is stated that a resident in USA cannot be an .....

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aid down by Hon ble Supreme Court in CIT vs. P.V.A.I. Kulandagan Chettiar (supra) deleted the addition of Capital Gain and income from Other Sources. In CIT vs. P.V.A.I. Kulandagan Chettiar, Hon ble Supreme Court held: The assessee not having permanent establishment in India - income derived from Rubber Estate in Malaysia- Not assessable in India- Capital gains arising on sale of immovable property in Malaysia- Not assessable in India. Considering the decision of honourable Apex Court and the fa .....

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or the Revenue supported the order of AO and argued that the CIT(A) wrongly given the benefit of section 10(10CC). AR for assessee argued that income from salary is not chargeable to tax in view of section 10(10CC) of the Act, and the assessee correctly claimed exemption of ₹ 38,04,684/- in the return of income. We have considered the rival contention of the parties and perused the material available on record. The AO while framing the assessment observed that the assessee has included the .....

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usion of ₹ 38,04,684/- from the head Income from Salary . Before the CIT(A) while arguing this ground, it was argued that assessee made a claim of deduction in the course of assessment proceeding in the light of special bench decision in ITAT, Delhi in RBF Rig Corporation LLC (297 ITR (AT to 228 Del.) Assessee could not file revised return within the time prescribed. The CIT(A) while considering the ratio and the case of special bench in case of RBF Rig Corporation LLC (supra) held that ta .....

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submission before the appellate authorities, but also entitled to raise additional claim before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. We have seen that Ld CIT(A) properly appreciated the provision of section 10(10CC) and accepted the claim of assessee which was denied by the AO on wrong premises, hence, we do not find any merit in this ground raised by the Revenue and the same is dismissed. 8. Ground No.3 raised in respe .....

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