ITO, Bangalore v. Lohitakshan Nambiar, Bangalore

ITA 1045/BANG/2009 | 2006-2007
Pronouncement Date: 12-04-2010 | Result: Dismissed

Appeal Details

RSA Number 104521114 RSA 2009
Bench Bangalore
Appeal Number ITA 1045/BANG/2009
Duration Of Justice 5 month(s)
Appellant ITO, Bangalore
Respondent Lohitakshan Nambiar, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 12-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 12-04-2010
Date Of Final Hearing 31-03-2010
Next Hearing Date 31-03-2010
Assessment Year 2006-2007
Appeal Filed On 12-11-2009
Judgment Text
PAGE 1 OF 5 ITA NO.1045/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K. J.M. AND SHRI A MOHAN ALANKAMONY A.M. ITA NO.1045/BANG/2009 (ASST. YEAR 2006-07) THE INCOME TAX OFFICER (INTL. TAXN.) WARD-1(3) BANGALORE. - APPELLANT VS MR. LOHITAKSHAN NAMBIAR 480 RAMYA KAVAL BYRASANDRA R T NAGAR BANGALORE-32. - RESPONDENT APPELLANT BY : SMT. JACINTA ZIMIK VASHAI RESPONDENT BY : SHRI CHANDRASHEKAR O R D E R PER GEORGE GEORGE K : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE CIT(A)'S ORDER DATED 31.8.2009. THE ASSESSMENT YE AR CONCERNED IS 2006-07. 2. THE EFFECTIVE GROUNDS RAISED READS AS FOLLOWS:- I) THE LEARNED CIT(A) ERRED IN DISALLOWING THE ADDITION MADE BY AO THEREBY DISREGARDING THE ACTUAL POSITION AS PER THE PROVISIONS OF SEC.5(2). II) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE DECISION OF HON'BLE ITAT CALCUTTA BENCH IN THE CASE OF RANJIT KUMAR BOSE V ITO REPORTED IN 25 TTJ 368 IS APPLICABLE TO THE CASE ON HAND. PAGE 2 OF 5 ITA NO.1045/BANG/2009 2 III) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT V AVTAR SINGH WADHVAN IS APPLICABLE IN THE INSTANT CASE. IV) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE SERVICES WERE CLEARLY RENDERED OUTSIDE INDIA AND THE INCOME ACCRUING OR ARISING OUTSIDE INDIA IS NOT TAXABLE IN INDIA. V) THE LEARNED CIT(A) ERRED IN APPRECIATING THE FACTS THAT THOUGH THE INCOME ACCRUED AND ARISED OUTSIDE INDIA IT WAS RECEIVED IN INDIA AND THUS IT IS AN INDIAN INCOME TAXABLE IN INDIA WITHIN THE PROVISIONS OF SEC.5(2) OF THE I T ACT 1961. 3. THE FACTS IN BRIEF ARE AS FOLLOWS:- THE ASSESSEE IS AN INDIVUDAL WAS WORKING ON BOAR D THE VESSEL 'MT ENDEAVOR' AN OCEAN LINER BELONGING TO M/S BARBER SHIP. THE ASSESSEE HAD STAYED OUTSIDE INDIA FOR 222 DAYS AND HENCE WAS ASSESSABLE AS A NON-RESIDENT. THE SA LARY OF THE ASSESSEE WAS PAID BY THE EMPLOYER M/S BARBER SHIP MALAYSIA DIRECTLY TO THE ASSESSEE ON BOARD THE SHIP. AT THE REQUEST OF THE APPELLANT CERTAIN PORTION OF THE SALARY PAID TO TH E ASSESSEE ABOARD THE SHIP WAS CREDITED BY THE EMPLOYER COMPANY TO HI S NRE ACCOUNT AT BANGALORE. THE ASSESSEE EXPLAINED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THAT THE SALARY WAS RECEIVED OUTSIDE INDIA AND THEREAFTER DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE BY THE ASSESSEE'S EMPLOYER ON INSTRUCTIONS FROM THE ASSESS EE. THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSION MAD E ON BEHALF OF THE ASSESSEE AND CONCLUDED THAT THE AMOUNTS AGGREGA TING RS.9 44 450/- CREDITED TO THE NRE ACCOUNT OF THE AS SESSEE REPRESENTED INCOME RECEIVED IN INDIA AND WERE THER EFORE LIABLE TO PAGE 3 OF 5 ITA NO.1045/BANG/2009 3 TAX U/S 5(2) OF THE ACT. THE CONCLUSION OF THE AO WAS BASED ON THE FOLLOWING REASONS:- THE INCOME OF THE ASSESSEE IS INDIAN INCOME AS IT I S RECEIVED OR DEEMED TO BE RECEIVED IN INDIA THOUGH IT ACCRUED OR AROSE OUTSIDE INDIA. INDIAN INCOME I S ALWAYS TAXABLE IN INDIA IRRESPECTIVE OF THE RESIDENTIAL STATUS OF THE TAXPAYER. THE ASSESSEE HAS NOT OFFERED HIS SALARY INCOME FOR TAXATION IN ANY OTHER COUNTRY. THE PROVISIONS OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) APPLY ONLY WHEN THE TAXPAYER IS RESIDENT OF ONE OR BOTH THE CONTRACTING STATES. AS THE ASSESSEE IS ADMITTEDLY NOT A RESIDENT IN ANY COUNTRY NO DTAA CAN BE APPLIED TO THE CASE OF THE ASSESSEE. NOR IS THE ASSESSEE ENTITLED TO ANY RELI EF U/S 91 OF THE ACT. 4. ON APPEAL THE CIT(A) ALLOWED THE PLEA OF THE A SSESSEE FOR HIS DETAILED REASONING MENTIONED IN PARA 5.3 5 .3.1 AND 5.3.2 OF HIS ORDER. 5. REVENUE BEING AGGRIEVED FOR REDRESSAL IS IN A PPEAL BEFORE US. 6. THE LEARNED DR STRONGLY RELIED ON THE FINDING T HE ASSESSING OFFICER. 7. PER CONTRA THE LEARNED AR SUBMITTED THAT THE I SSUE IN QUESTION IS SQUARELY COVERED BY THE ORDER OF THE TR IBUNAL IN ITA NO.1137/BANG/2008 DATED 26.6.09 WHEREIN IDENTICAL F ACTUAL MATTER WAS CONSIDERED. PAGE 4 OF 5 ITA NO.1045/BANG/2009 4 8. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE THE UNDIS PUTED FACT IS SALARY WAS RECEIVED FROM THE EMPLOYER M/S BARBER SHIP ABOA RD AND A PORTION OF THE SAME WAS REMITTED TO THE ASSESSEE'S NRE ACCOUNT IN BANGALORE THROUGH TELEGRAPHIC TRANSFERS. THE TRIBU NAL IN THE CASE OF MR. PRAHLAD VIJENDRA RAO IN ITA NO.1137/08 SUPRA IN IDENTICAL CIRCUMSTANCES HAS HELD AS FOLLOWS:- 'WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. WE ARE OF THE VIEW THAT AO HAS WRONGLY CONSTRUED THE PROVISION OF SECTION 5(2)(A) OF THE ACT WHILE HOLDING THAT THE SALARY INCOME WAS RECEIVED IN INDIA AND HENCE TAXABLE. SALARY INCOME IS TAXABLE ON ACCRUAL BASIS UNDER SECTION 15 OF THE ACT. IN OTHER WORDS SALARY DUE IS TAXABLE WHEN IT IS RECEIVABLE BY THE ASSESSEE REGARDLESS OF THE FACT THAT THE SALARY HAS BEEN ACTUALLY RECEIVED OR NOT. IT IS ONLY ADVANCE SALARY THAT IS TAXABLE ON RECEIPT BASIS AS AN EXCEPTION TO THE RULING THAT SALARY IS TAXABLE ON ACCRUAL BASIS. THE ASSESSEE HAS RENDERED SERVICES TO M/S LIVE STOCK TRANSPORT AND TRADING COMPANY WHICH IS A KUWAIT COMPANY. THE ASSESSEE HAS RENDERED THE SERVICES ON BOARD THE OCEAN LINER TO THE SAID COMPANY AND ASSESSEE WAS STAYING OUTSIDE INDIA FOR MORE THAN 182 DAYS. THE SALARY PAYABLE TO THE ASSESSEE IS ON BROAD THE OCEAN LINER AND THE SALARY IS NOT PAYABLE IN INDIA. IT IS ONLY THE RECEIPT OF THE SALARY THAT IS IN INDIA ON INSTRUCTIONS OF THE ASSESSEE TO CREDIT THE SALARY IN THE BANK ACCOUNT OF THE ASSESSEE IN INDIA. IN THIS CONTEXT HONBLE ITAT CALCUTTA BENCH IN THE CASE OF RANJIT KUMAR PAGE 5 OF 5 ITA NO.1045/BANG/2009 5 BOSE REPORTED IN 25 TTJ 368 UNDER SIMILAR FACTUAL MATRIX HAS HELD THAT THE SALARY ACCRUED OUTSIDE INDIA CANNOT BE TAXED IN INDIA MERELY BECAUSE IT IS RECEIVED IN INDIA. THE RATIO OF THE SAID DECISION IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE'. 9. THE FACTS BEING SIMILAR RESPECTFULLY FOLLOWING THE COORDINATE BENCH OF THE TRIBUNAL CITED SUPRA WE HO LD THAT THE ORDER OF THE CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED ON 12TH APRIL 2010. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) TH E CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. (7) GUARD FILE NEW DELHI. MSP/31.3 BY ORDER ASST. REGISTRAR ITAT BANGALORE.