TMI Blog2022 (10) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... f UK tax return, it could be seen that the assessee has offered earnings from employment for 24184 on net basis which has been tax grossed up for 6046. This is in view of the fact that OFSSL has paid provisional payment of 9062 to UK revenue authorities since the employer has undertaken to meet the UK income tax liability arising from employee s earnings in UK. Accordingly, the assessee has claimed refund of 3016. On the basis of the above, it could be seen that separate tax payment has been made by OFSSL to UK revenue authorities to discharge the tax liability of the assessee in that country. The assessee has also placed on record Tax Residency Certificate - As per this certificate, the assessee has claimed relief for foreign earning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing a tax resident of UK, is taxable only in the country where employment is exercised (i.e., UK). The learned CIT(A) has further erred in law and on facts in not appreciating that merely because the Appellant is on the payroll or employment of OFSS India, that by itself will not impact or alter the taxability in India. 3. Without prejudice to the above, that the learned CIT(A) has erred in law and on facts in holding that as per provision of section 5(2) of the Act, salary of the Appellant shall be taxable in India on receipt basis. While holding so, the learned CIT(A) has not appreciated the provisions of section 15 read with section 5(2) and section 9(i)(ii) of the Act, which clearly provides for taxability of salary on accrual basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been controverted by Ld. Sr. DR. Having heard rival submissions and after due consideration of material facts, our adjudication would be as under. Assessment Proceedings 3.1 The assessee admitted salary income of Rs.37.32 Lacs in the return of income filed on 25.06.2015. However, the return was revised on 26.05.2016 wherein the income was declared as nil after claiming exemption under Article 16(1) of India-UK Double Taxation Avoidance Agreement (DTAA) and refund of Rs.9.73 Lacs was claimed. The Ld. AO show-caused the assessee as to why salary income of Rs.38.42 Lacs as reflected by assessee s employer in Form 16 not be considered as total income of the assessee. 3.2 It transpired that the assessee was an employee of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India and Form 16 was also issued by OFSSL. The assessee merely got an opportunity to work in UK only because of his being an employee of OFSSL which may benefit OFSSL in many ways, directly and indirectly. In the form of direct benefit, the company will be paid by the foreign company for the services rendered by its employee and in form of indirect benefit, the employee of company gets experience, which will help the company in getting internationally experienced employee. All these factors show that there was Employee-Employer relationship between assessee and OFSSL even though the assessee was working in UK. Therefore, the salary due from an employer would be taxable u/s 15 of Income Tax Act. Further, Sec.5(2) provide that for non-reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief, if any, has to be given by the resident country. Since the assessee was resident of UK, he was not eligible to claim the relief under Article 16 of DTAA. Therefore, the additions were upheld against which the assessee is in further appeal before us. Our findings and Adjudication 5. From the fact it emerges that the assessee has stayed in India for 63 days during this year and his status, as per law, is non-resident. The assessee has worked in India for 21 days and offered proportionate salary to that extent to tax. For remaining period, the work has been performed in UK though the salary has been received in India from existing employer. It is also a fact on record that this salary, for work performed in UK, has been offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia would be taxable in Australia. The case law of Swaminathan Ravichandran V/s ITO (ITA No.2911/Mds/2016 dated 05.08.2016) was held to be factually distinguished on the ground that in that case the assessee was claiming foreign tax credit relief for taxes paid on doubly taxed income which was not the case in that appeal. In para-7, the bench found the issue to be covered in assessee s favor by various judicial precedents including the decision of Hon ble Karnataka High Court in DIT V/s Prahlad Vijendra Rao (198 Taxman 551); decision of Hon ble Bombay High Court in CIT V/s Avtar Singh Wadhawan (247 ITR 260); decision of Hon ble Calcutta High Court in Sumanabandyopadhyay V/s DDIT (TS-281-HC-2017) as well as CBDT Circular No.13/2017 dated 11/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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