ACIT, New Delhi v. Shri Snehil Gambhir, New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI A.D. JAIN AND SHRI K.D. RANJAN ITA NOS. 1040 & 1041(DEL)2009 ASSESSMENT YEARS: 2001-02 & 2002-03 ASSISTANT COMMISSIONER OF INCOME TAX SHRI SN EHIL GAMBHIR CIRCLE 46(1) NEW DELHI. V . C/O 303 MANSAROVER 90 NEHRU PLACE NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAVI RAMACHANDRAN DR RESPONDENT BY: SHRI SUR ESH MALIK CA ORDER PER A.D. JAIN J.M . THESE ARE DEPARTMENTS APPEALS FOR ASSESSMENT YEARS 2001-02 & 2002-03 CONTENDING THAT THE LD. CIT(A) HAS ERRED I N DELETING THE ADDITION OF ` 4 41 238/- (FOR ASSESSMENT YEAR 2001-02) AND ` 2 50 072/- (FOR ASSESSMENT YEAR 2002-03) MADE BY THE AO U/S 90 OF THE I.T. ACT HOLDING THAT THE ASSESSEE WAS IN INDIA FOR ONLY 46 DAYS DURING ASSES SMENT YEAR 2001-02 AND FOR ONLY 21 DAYS DURING ASSESSMENT YEAR 2002-03. 2. THE ASSESSEE INDIVIDUAL WAS WORKING WITH GE CAPI TAL INTERNATIONAL SERVICES AS VICE PRESIDENT GLOBAL BUSINESS DEVELOP MENT. HE CLAIMED ITA NOS. 1040&1041(DEL)09 2 RELIEF U/S 90 OF THE I.T. ACT FOR BOTH THE CONCERNE D YEARS WHICH CLAIM WAS DISALLOWED BY THE ASSESSEE. 3. BY VIRTUE OF THE IMPUGNED ORDERS THE LEARNED CI T(A) HELD THE ASSESSEE ELIGIBLE FOR RELIEF U/S 90(II) OF THE ACT AND DELETED THE DISALLOWANCES. 4. AGGRIEVED THE DEPARTMENT HAS FILED THE PRESENT APPEALS. 5. THE LD. DR HAS ARGUED THAT THE LD. CIT(A) HAS ER RED IN DELETING THE DISALLOWANCE CORRECTLY MADE ; THAT THE LD. CIT(A) WHILE DOING SO ERRONEOUSLY IGNORED THE FACT THAT IN THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 THE ASSESSEE HAD SURRENDER ED THE CLAIM OF RELIEF U/S 90 OF THE ACT WHICH WAS THE REASON FOR THE REOPENI NG OF THE COMPLETED ASSESSMENT; THAT THE AO HELD FOR BOTH THE YEARS T HE ASSESSEE TO HAVE RENDERED SERVICES IN INDIA AND HIS SALARY DEEMED TO HAVE BEEN ACCRUED OR ARISEN IN INDIA AS PER SECTION 9(1)(I) OF THE ACT; THAT THE ASSESSEE HAD REMAINED UNABLE TO OFFER ANY EXPLANATION BEFORE THE AO; AND THAT THEREFORE THE ORDERS OF THE LD. CIT(A) ARE NOT SUSTAINABLE IN THE EYE OF LAW AND THE SAME BE CANCELLED BY REVIVING THOSE PASSED BY THE A O. 6. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND HAS STRONGLY SUPPORTED THE IMPUGNED ORDERS. IT HAS BEEN CONTEND ED THAT THERE WAS NO SURRENDER BY THE ASSESSEE AND THE AO WAS INCORRECT IN OBSERVING THAT ANY ITA NOS. 1040&1041(DEL)09 3 SUCH SURRENDER WAS MADE IN THE ASSESSMENT PROCEEDI NGS FOR ASSESSMENT YEAR 2002-03; THAT IN THE ASSESSMENT ORDER FOR ASSESSMEN T YEAR 2001-02 THE AO ERRED IN FOLLOWING THIS OBSERVATION TO MAKE THIS DI SALLOWANCE; THAT THE ASSESSEE IS A SALARIED PERSON A CITIZEN OF THE US A; THAT HE WAS IN INDIA FOR ASSESSMENT YEAR 2001-02 FOR 46 DAYS ONLY AND HE WA S IN INDIA FOR 21 DAYS IN ASSESSMENT YEAR 2002-03; THAT AS PER HIS EMPLOYM ENT LETTER HE WAS TO RENDER SERVICES IN INDIA AS WELL AS IN ABROAD; THAT THE LD. CIT(A) HAS TAKEN THESE FACTS INTO CONSIDERATION WHILE PASSING THE OR DERS UNDER APPEAL; AND THAT THEREFORE THERE BEING NO MERIT THEREIN BOTH THE APPEALS FILED BY THE DEPARTMENT BE DISMISSED. 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. IT HAS BEEN FACTUALLY FOUND THAT THE ASSESSEE WAS IN I NDIA FOR ONLY 46 DAYS DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YE AR 2001-02 AND FOR ONLY 21 DAYS DURING THE FINANCIAL YEAR RELEVANT TO ASSES SMENT YEAR 2002-03. THAT BEING SO IT COULD NOT HAVE BEEN CONCLUDED THAT THE REMUNERATION HAD BEEN PAID TO THE ASSESSEE FOR THE SERVICES RENDERED IN I NDIA THE PROVISIONS OF SECTION 9(1)(II) OF THE ACT BEING NOT APPLICABLE. IT HAS NOT BEEN SHOWN OTHERWISE. ITA NOS. 1040&1041(DEL)09 4 8. APROPOS THE OBSERVATION OF THE AO REGARDING THE SURRENDER HAVING BEEN MADE BY THE ASSESSEE BEFORE THE AO IN THE ASSE SSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 THE ASSESSEE HAD SUBMITTED BEFORE THE LD. CIT(A) THAT IT WAS FACTUALLY THE WRONG OBSERVATION MADE BY THE AO THAT THE ASSESSEE HAD SURRENDERED THE CLAIM OF RELIEF U/S 90 OF THE ACT SINCE THE ASSESSEE HAD REMAINED UNABLE TO OFFER ANY EXPLANATI ON ON BEING QUERIED BY THE AO. THE ASSESSEE HAD ENCLOSED BEFORE THE LD. CIT(A) COPIES OF NOTE SHEET FORMING PART OF ASSESSMENT RECORD OF THE ASSE SSMENT YEAR 2002-03. IT IS THIS CONTENTION WHICH HAS BEEN REITERATED BEFORE US. THIS CONTENTION DOES NOT STAND FALSIFIED. 9. THE LD. CIT(A) ALSO OBSERVED THAT THE AO HAS ACC EPTED THE RESIDENTIAL STATUS OF THE ASSESSEE AS A NON-RESIDENT AND HELD T HAT AS SUCH AS PER THE PROVISIONS OF SECTION 90(II) OF THE ACT ARTICLE 16 OF THE INDO US DTAA THE ASSESSEE BEING A CITIZEN OF THE USA AND A NON-RESID ENT INDIAN TO BE LIABLE TO TAX IN THE USA ONLY. IT WAS ALSO OBSERVED THAT IT WAS EVIDENT FROM THE INCOME TAX RETURN FILED BY THE ASSESSEE IN THE USA THAT HE HAD ACTUALLY SUBMITTED HIS INCOME FOR TAXATION IN THE USA ONLY A ND THAT SO HE COULD NOT BE SUBJECTED TO DOUBLE TAXATION. THESE OBSERVATIO NS OF THE LD. CIT(A) ALSO REMAINED UNHINGED. ITA NOS. 1040&1041(DEL)09 5 10. IN VIEW OF THE ABOVE FINDING NO ERROR WHATSOEV ER IN THE TWO ORDERS PASSED BY THE LD. CIT(A) BOTH THESE ORDERS ARE CO NFIRMED. THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS REJECTED. 11. IN THE RESULT BOTH THE APPEALS FILED BY THE DE PARTMENT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.2011. (K.D. RANJAN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28.02.2011. *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR