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TMI Blog2024 (2) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt including foreign assignment allowance amounting to Rs. 26,10,209/- for services rendered outside India was to tax under the Act, 1961 by not allowing exemption claimed under Article 16(1) of India-UK Double Taxation Avoidance Agreement and further enhancing the income by Rs. 24,28,806/-. 3. Facts in brief are that the assessee is a non-resident employee with IBM India Pvt. Ltd. and was sent on short term foreign assignment to United Kingdom for relevant period. The assessee was in receipt of total salary income amounting to Rs. 50,39,015/- from his employer on which taxes were deducted at source and withheld in India. Out of the salary income of Rs. 50,39,015/-, an amount of Rs. 26,10,209/- was received by the assessee outside Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in India. The assessee has received total salary as stated above and the same has been returned and offered to tax in UK. The income tax return and certificate of residence has been placed in the paper book from page no. 27 to 32. The assessee claimed relief as per DTAA between India and United kingdom which was not allowed for the want of tax residency certificate by the AO. In our opinion, once the assessee qualifies to be treated as non-resident u/s 6 of the Act then the scope of the taxable income is in the hands of assessee would be as per Section 5(2)(b) of the Act. In the present case also the assessee undisputedly is a non-resident and therefore the salary received by the assessee while rendering service in abroad is not taxable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Shri Govardhan Ltd (supra) and his observation to the effect that "by receiving the appointment letter and details of salary to be paid, the assessee gets right to receive the salary", this is wholly incorrect to assume that an employee gets right to receive the salary just by getting the appointment letter. An employee has to render the services to get a right to receive the salary and unless these services are rendered, no such right accrues to the employee. Undoubtedly, if an assessee acquires a right to receive an income, the income is said to have accrued to him even though it may be received later, on it's being ascertained, but this proposition will be relevant only when assessee gets a right to receive the income, and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Article 15(1) of the IndiaAustria DTAA only for want of Tax Residence Certificate (TRC) from Austria. The submission of the assessee in this regard was that despite best possible efforts he was not able to procure TRC from country of residence and the situation may be treated as "impossibility of performance". I find merits in the submission of the assessee. Normally it is a herculean task to obtain certificates from alien countries for compliance of domestic statutory obligations. In such circumstances the taxpayer cannot be obligated to do impossible task and penalized for the same. If the assessee provides sufficient circumstantial evidence in such cases, the requirement of section 90(4) ought to be relaxed. Further, it is obvious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 IndiaAustria 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 pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DIT Vs. Prahlad Vijendra Rao (239 CTR 107), on which reliance placed by the assessee, the Hon'ble 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. 17. The 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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