TMI Blog2020 (3) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... e Karnataka High Court held that under section 15 of the Act even on accrual basis salary income is taxable i.e. it becomes taxable irrespective of the fact whether it is actually received or not; only when services are rendered in India it becomes taxable by implication. However, if services are rendered outside India such income would not be taxable in India. Other objections raised by the Ld. AO that evidence was not produced for receiving the foreign allowance outside India and the bank account of the assessee maintained abroad was not produced is not relevant because the facts of the case establishes that the salary and the foreign allowance was received in India for the services rendered abroad and by virtue of DTAA and the Act, there is no bar in law for receiving the money in India - We direct the Ld.AO to delete the tax imposed on the assessee with respect to his salary income which includes foreign allowance earned by him outside India during the relevant assessment year. - Decided in favour of assessee. - ITA No. 1464/Hyd/2018 - - - Dated:- 5-3-2020 - Shri A. Mohan Alankamony, Accountant Member For the Assessee : Shri Nageswara Rao For the Revenue : Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the FY 2013-14. he qualifies as a Non-resident under section 6(1) of the Act. Therefore, the foreign allowance of ₹ 26,93,062/- was not offered to tax in India in the return of income as the same was received by him outside India for the services rendered outside India and shall not form part of total income under section 5(2) of the Income tax Act, 1961. Also, as the assessee qualifies as a tax resident of Austria, exemption under Article 15(1) of the India- Austria Double taxation Avoidance Agreement (DTAA) has been claimed in the return of income for the employment income. Based on the above, any salary income earned by a tax resident of Austria for services rendered in Austria is taxable only in Austria. In case services have been rendered in India the income for workdays spent in India is taxable in India. The Assessee wishes to submit that for the captioned AY, he was a tax resident of Austria and a non- resident in India. Hence, the salary received with respect to the services rendered in Austria is not unable as per article 15(1) of the India-Austria DTAA. In view of the above, in the return of income filed, the Assessee has claimed exemption of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IBM on account of employment rendered in Austria. It was further submitted that the entire salary income of the assessee has been taxed in India as well and taxes at source have been deducted u/s 192(1) of the Act, which has resulted in double taxation. It was therefore clarified that since there is an incidence of double taxation on the same income the assessee had claimed exemption u/s 90 of the Act read with Article 15(1) of the India-Austria DTAA in respect of the doubly taxed income which is appropriate. 10. The ld. AR further argued that since the assessee qualifies as tax resident of Austria for the period April 01, 2013 to March 31, 2014, the salary income amounting to INR 47,96,211/- which includes foreign allowance earned for the said period has been claimed as not taxable in India as per the provisions of Article 15(1) of India-Austria DTAA. It was also argued that the assessee qualifies as non-resident in India for the relevant PY 2013-14 and therefore the foreign allowances received outside India for the services rendered outside India has been claimed as not taxable in India as per section 5(2) of the Act. Hence it was pleaded that the tax imposed by the Revenue m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of treaty over the domestic law. It can only be pressed into service as a provision beneficial to the assessee .. . Therefore, the stand of the Ld. Revenue Authorities on this issue is devoid of merits. 12. As per Article 15(1) of the India-Austria DTAA, salaries, wages and other similar remuneration derived by a resident of a contracting state in respect of an employment shall be taxable only in that state unless the employment is exercised in the other contracting state. If the employment is so exercised, such remuneration as is derived therefore may be taxed in that other state. Further, Article 4(1) the India-Austria DTAA defines the term resident as under: For the purposes of this convention, the term resident of a contracting state means any person who, under the laws of that state, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that state and any political sub-division or local authority thereof. 13. Therefore, in the case before me the following conditions are required to be satisfied to claim exemption under Article 15(1) of the India-Austria DTAA: - The pe ..... 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