9911796707
TMI Blog2020 (8) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of this Tribunal, vide order dated 15th September 2017. Subsequently, the Revenue filed an application under section 254(2) of the Act seeking rectification of order by stating that grounds no.4 and 5, raised in the memorandum of appeal have not been disposed off by the Tribunal. Finding the aforesaid claim/contention of the Revenue to be correct, the Tribunal, vide order dated 22nd February 2019, in M.A. no.451/ Mum./2018, recalled the earlier order for the specific purpose of disposing off grounds no.4 and 5. This is how the present appeal has come up for hearing before us. 3. The issue raised in grounds no.4 and 5, pertains to deletion of disallowance of Rs. 1,46,79,148, under section 40(a)(iii) of the Act. 4. Brief facts are, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Office situated outside India and their salary cost was reimbursed on actual basis without any mark-up as per the monthly time sheets maintained, the income earned by the employees does not accrue and arise in India. In this context, the assessee specifically referred to the provisions contained under section 9(1)(ii) of the Act. Further, to substantiate its claim, the assessee submitted copy of the debit notes and time sheets. Without prejudice, the assessee further submitted that even as per the provisions of respective Double Tax Avoidance Agreement (DTAA) between India-Japan and India-South Korea, salaries, wages and other remunerations received by a resident of Japan and South Korea in respect of their employment shall be taxable in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India only if it is earned in India for services rendered in India and which also would include the rest period/leave period preceding and succeeding the services rendered in India. He observed, since the employees rendered services outside India and payments were also made outside India, the provisions of section 9(1)(ii) of the Act would not be applicable. Thus, he held that when the specific provision relating to taxability of salary income is not applicable, the Assessing Officer could not have brought such income to tax by referring to the provision of section 9(1)(i) of the Act. Thus, ultimately, he deleted the disallowance made by the Assessing Officer. 6. The learned Departmental Representative strongly relying upon the observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is concerned, there is no dispute that the non-resident employees to whom salary was paid were located in the respective Head Offices of the partner companies in Japan and south Korea and they were performing their services while located at Head Office. Though, such services were rendered in connection with the Metro Rail Project in India. Therefore, it requires to be examined whether the salary paid to non-residents towards services rendered in course of their employment in the country of a residence can be deemed to accrue or arise in India. In this context, we may refer to clause (ii) of section 9(1) which is a deeming provision. As per the aforesaid provision, the income falling under the head salary is deemed to accrue or arise in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of employment in the source country, such income would be taxable in the source country. In the facts of the present case, undisputedly, the non-resident employees to whom the salary has been paid have exercised their employment in their respective countries of residence. Therefore, any income derived by them is taxable only in their country of residence and not in India. Therefore, the Treaty provisions being more beneficial as per section 90(2) of the Act, will override the provisions of the Act. Therefore, there is no need for the assessee to deduct tax at source while reimbursing the salary expanses. In view of the aforesaid, we are inclined to uphold the decision of learned Commissioner (Appeals) on the issue. Grounds raised are dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
