TMI Blog2018 (8) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... A)- 22/Kol/13-14/16-17 dated 18.01.2017 against the order passed by the DCIT(IT), Circle-2(1), Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 28.03.2016 for the Assessment Year 2013-14. 2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the addition made in the sum of ₹ 1,24,65,174/- which was brought to tax by the ld AO by applying the provisions of section 5(2) of the Act, in the facts and circumstances of the case. 3. The brief facts of this issue are that the assessee was an employee in IBM India Private Limited and during the financial year 2012-13 was sent on short term assignment to Nigeria. He had stationed in Nigeria for 311 days during the year under consideration. Accordingly, his residential status for the year under consideration would be Non-Resident. During the year under consideration, the assessee had received the following emoluments from IBM :- a) Gross Salary received in India ₹ 32,82,438/- and b) Foreign allowances on account of the international assignment received in Nigeria ₹ 1,24,65,174/- IBM had effected TDS of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on the portion of foreign assignment allowance because the residential status as well as the tax residency of the assessee was not known. 4.2. The assessee vide letter dated 21.12.2015 elaborated the modality of payment of Foreign Assignment Allowance by IBM as under:- .. We would submit before your goodself that the foreign assignment allowance was paid by IMB India Private Limited, employer of the captioned assessee, to the International Travel Card outside India (copy of travel card statement enclosed as Annexure 3). The said card is denominated in foreign currency only and can be used only outside India. Once an employee is sent on foreign assignment, a travel currency card is issued to the employee by Axis Bank Limited. Upon instructions from IBM, Axis Bank pays the amount of foreign assignment allowance to the international travel card of the employee outside India through its Nostro account situated outside India. A nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro Accounts are used to facilitate settlement of foreign exchange and trade transactions. A Nostro Account is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in the sum of ₹ 51,84,489/-. 5. The ld CITA deleted the addition and granted relief to the assessee. Aggrieved, the revenue is in appeal before us. 6. The ld DR argued that the monies were received by the assessee only pursuant to employer employee relationship and out of employment contract which is entered in India and is also enforceable in Indian courts. He argued that TCC was issued by Axis Bank, which is a prepaid card and can be loaded / reloaded in foreign currency. The Axis Bank TCC is available in US, Australian, Canadian and Singapore Dollars, Euros, Sterling Pounds, Swiss Francs and Swedish Kroner Currency on VISA platform . The US dollars, Sterling Pounds, Euros, Dirhams and Saudi Riyals variants are also available on MASTERCARD platform. One can use the travel card in any country where VISA / MASTERCARD has acceptance. An individual does not need an account relationship with Axis Bank branch or the office of select full-fledged money changers (FFMC) and purchase an Axis Bank TCC as he can simply walk into any Axis Bank branch or the office of select FFMC and purchase an Axis Bank TCC over the counter. At the time of purchase of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy in its EEFC account maintained with Deutsche Bank, Bangalore. c) IBM instructs Axis Bank to issue Travel Currency Card to its employees who are sent on foreign assignment, which is loosely called Axis TCC. d) Axis Bank has maintained a Nostro Account with its Correspondent Banker (Zuercher Kantonal Bank, Zurich). e) IBM transfers funds from its EEFC Account from Deutsche Bank to the Nostro Account of Axis Bank (i.e Zuercher Kantonal Bank) for the purpose of loading / reloading the Axis TCC issued to the assessee who is sent on foreign assignment. f) The employee who is sent on foreign assignment uses the said funds outside India out of monies topped up or credited in his Axis TCC. Hence it could be safely concluded that the first point of receipt for the assessee happens outside India. This money is used by him for his sustenance in Switzerland. Both the accrual and receipt of income happens outside India. Hence the same is outside the ambit of tax as per the provisions of section 5(2) of the Act. The services of the assessee are also utilized only outside India. g) This foreign assignment allowance is duly subjected to tax in the country of Switze ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AR for the assessee reiterated the submissions made before the ld. CIT(A) and submitted that the appellant is an employee of IBM India Pvt. Ltd., was sent on an International assignment to Netherlands during the previous year 2007-08. The appellant received foreign allowances of ₹ 17,27,360/- outside India for the services rendered in Netherlands. As the appellant, qualified as a non-resident during the relevant assessment year and foreign allowances received by the appellant is not liable to tax U/s 5(2) of the Act. The appellant had disclosed total income of ₹ 3,27,910/- excluding the foreign allowances and against this income, the tax of ₹ 48,790/- was paid by the appellant. The employer deducted TDS wrongly at ₹ 6,36,484.65 and appellant also paid self assessment tax at ₹ 4,653/- on account of his interest income from bank deposits. Therefore, the appellant had claimed refund of ₹ 5,92,305/- by filing the return. The learned Assessing Officer submitted that the amount of ₹ 17,27,360/- was received by the appellant in Netherlands from his employment on account of foreign allowances, for which he produced certificate from the empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erland and not in India and first point of receipt also happens only in Switzerland. Hence it could be safely concluded that both accrual and receipt of funds happens outside India thereby making the said receipt to stay outside the ambit of taxability u/s 5(2) of the Act. 7.7. We also find that identical claim of exemption of the assessee was allowed by the ld AO for the Asst Year 2014-15 u/s 143(3) of the Act dated 10.12.2016 after detailed examination of the same and by giving proper findings in the assessment order vide para 5.02 and 5.03. 7.8. In view of the aforesaid findings in the facts and circumstances of the case and by respectfully following the various judicial precedents relied upon hereinabove, we hold that the ld CITA had rightly deleted the addition made on account of disallowance of claim of exemption in respect of foreign assignment allowance received by the assessee outside India . Hence we do not find any infirmity in the order of the ld CITA in this regard. Accordingly, the grounds raised by the revenue are dismissed. 8. In the result, the appeal of the revenue is dismissed in all the three cases. 5. In view of the aforesaid findings in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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