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Facts
The assessee, a non-resident individual, filed his return of income for AY 2016-17. The Assessing Officer added foreign allowance and stock options totaling INR 6,628,864 to his income, treating them as taxable. The Ld. CIT(A) upheld the additions, dismissing the appeal on the grounds that the assessee failed to produce bank statements to prove income was received outside India.
Held
The Tribunal noted the CIT(A)'s dismissal was due to a lack of documents. Considering the additional evidence filed by the assessee (tax withholding certificate from IBM Schweiz AG and Axis Travel Currency Card statements) and cited judicial pronouncements, the Tribunal set aside the CIT(A)'s order and remitted the case back to the CIT(A) for fresh adjudication after reviewing all submitted documents and arguments.
Key Issues
Whether foreign allowance and stock options received by a non-resident for services rendered outside India are taxable in India under Section 5(2) of the Income Tax Act. Whether additional evidence submitted by the assessee should be admitted and considered by the appellate authorities for fresh adjudication.
Sections Cited
143(3), 5(2), 234B, 234D, 6(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Pradip Kumar Choubey&Shri Sanjay Awasthi]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
This is the appeal preferred by the assessee against the order of Commissioner of Income Tax (Appeal)-22, Kolkata (hereinafter referred to as the Ld. CIT(A)] dated 30.11.2023 for AY 2016-17.
Assessment Year: 2016-17 Shri Puspendu Sekhar Nandy 2. Brief facts of the case of the assessee are that the assessee being an individual, filed his return of income online for the AY 2016-17 on 22 July 2016, declaring taxable income of INR 774,350 after claiming a deduction of INR 191,490 under Chapter VI- A of the Act. The Appellant has claimed a refund of INR 2,014,700 in his return of income after adjusting tax payable of INR 82,266 against the tax deducted at source ("TDS') of INR 2,096,969 [as per Form 16 issued by IBM India Private Limited ('IBM')]. The Deputy Commissioner of Income Tax, International Taxation, Circle 2(1), (hereinafter referred to as "the learned Assessing officer") has completed the assessment under Section 143(3) of the Act on 15 December 2018. The learned Assessing officer passed the assessment order with the following addition / adjustment: Added foreign allowance received in Switzerland which does not form part of total income of the Appellant under section 5(2) of the Act - INR 6,610,404; and Added stock option perquisites amounting to INR 18,460 which represents benefit accrued to the assessee for the services rendered outside India from the date of grant to the date of vesting- INR 18,460. After making the above adjustments/ additions, the learned Assessing Officer has determined the assessable income at INR 7,403,220 as against the returned income of INR 774,350. The tax liability determined as per the assessment order on the assessed income is INR 2.107,345. Also, interest of INR 3,399 under section 234B and INR 201.470 under Section 234D has been levied and thereby determined an aggregate tax liability of INR 2,312,214. Further, after allowing the credit of TDS of INR 2096,969 and considering amount of INR 2,091,270 as already refunded to the Appellant, the learned Assessing Officer has raised a final demand of INR 2,306,515.
Aggrieved by the said assessment order, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been dismissed by the Ld. CIT(A) by holding that the assessee neither proved nor attempted to prove that any of his income was actually received by him outside India through the production of statement of bank accounts.
Being aggrieved and dissatisfied the assessee preferred an appeal before us.
Assessment Year: 2016-17 Shri Puspendu Sekhar Nandy 4. The Ld. Counsel appeared on behalf of the assessee challenges the very impugned order thereby submitting that the Ld. CIT(A) erred in upholding the assessment order proving foreign allowance received outside India towards service outside India. The Ld. Counsel further submits that the assessment order proceeded on incorrect facts and extraneous consideration to bring to tax amount not covered u/s 5(2) in case of non-resident and impugned order of Ld. CIT(A) erred in upholding the same without appreciating the judicial pronouncement on the subject above. The Ld. A.R further submits that the Ld. CIT(A) erred in over emphasizing on business of foreign bank statement of irrelevant tax residency certificate and ignoring to give due weightage to relevant circumstantial evidences that proved the case of the assessee. The Ld. A.R filed few additional evidences with a petition of prayer to taken on record. The Ld. A.R in course of argument has submitted that the document which have been filed by the AR before the Tribunal is not strictly an additional evidence as relief claimed, but to meet out the argument advanced by the department the same is being filed. The Ld. AR has also cited judicial pronouncement in this context: i) CIT vs. Avtar Singh Wadhwan [2001] 115 Taxman 536 (Bom) ii) DIT s. Prahlad Vijendra Rao [2011] 198 Taxman 551 (Kar) iii) Utanka Roy vs. DIT (IT) [2017] 291 CTR 501 (Cal) iv) DCIT vs. Sudipta Maity [2018] 96 taxmann.com 336 (Kol-Trib) v) Arindam Dasgupta vs. ACIT in vi) Debargya Chattopadhyay vs. CIT, Kolkata in ITA No. 24/Kol/2023 vii) Bodhisattva Chattopadhyay vs. CIT [2019] 111 taxmann.com 374 (Kol-Trib) viii) Tadimari Prasanth Reddy vs. ITO (IT) [2023] 153 taxamnn.com 281 (Hyderabad- tribunal) ix) Durga Prasad Sana vs. ITO (IT) 154 taxmann.com 532 (Hyderabad-Tribunal) xi) Arvind Singh Chauhan vs. ITO, Ward- 1(2), Gwalior [2014] 42 taxmann.com 285 (Agra-Tribunal) xii) Sreenivasa Reddy Cheemalamarri vs. ITO (IT)-1, Hyderabad, ITA No. 1463/Hyd/2018 xiii) Secro BPO Pvt. Ltd. vs. Authority of Advance Rulings, New Delhi [2015] 379 ITR 256 (Punjab and Haryana) xiv) Skaps Industries India Pvt. Ltd. vs. ITO, IT, Ahmedabad [2018] 171 ITD 723 (Ahmedabad) xv) Santanu Sanyal vs. ACIT, Circle-2(1), Kolkata in ITA NO. 41/Kol/2024
Contrary to that the Ld. D.R supports the impugned order thereby submitting that since the assessee did not file the statement of account to establish that the assessee earned income outside in India, hence the Ld. CIT(A) has no option to affirm the order of AO. The ld. D.R has further submitted that the additional evidence which have been filed by the assessee before the tribunal if essential decide the case of the assessee then in that event the case of the assessee should be remitted back to the file of Ld. CIT(A) for fresh adjudication as the Ld. CIT(A) is the only competent authority to decide the issue involved.
Upon hearing the submission of the counsel of the respective parties, we have perused the impugned order and find that solitary issue with regard to taxability of certified amount in India. It is the case of the assessee is that the assessee was employed with IBM India Pvt. Ltd. during assessment year and received the gross salary of INR 76,87,915/- as per form no. 16 from his employer IBM in which the assessee claimed relief of INR 66,10,404/- u/s 5(2) of the Act. It appears from the order passed by the Ld. CIT(A) that the assessee has submitted a copy of certificate issued by Axis Bank where Assessment Year: 2016-17 Shri Puspendu Sekhar Nandy only account numbers and intermediary bank names are there but not produced any foreign account details/ statement where he received remuneration during foreign assignment. On perusal of the impugned order the following facts which as per the Ld. CIT(A) in case of appellant are an admitted fact: i. That assessee was employed in India with company present in India. ii. That he had been sent at the behest and by the orders of his employer to Switzerland. iii. That all the services rendered by him in Switzerland were on account of the functioning that his employer had to undertake in Switzerland. iv. No action was taken or services rendered by the appellant outside India that was or could be construed to be on his own account, independent of his employer or even slightly divergent from the objectives/tasks that his employer had to complete in Switzerland, and for the completion of which his employer had deputed the appellant. v. The control over his employment, his objective is going to Switzerland; his work outside India; his Individual tasks all lay on a continuous basis with his employer who was always in India. vi. In terms of a business process, his entire work in Switzerland lay within the purview of the business functioning of his employer and no divergence from it or scope for independent functioning could even theoretically exist on account of his employment. vii. All payment made for the services/tasks rendered/completed by the appellant's employer and not by him. 8. He has no where brought on record any evidence that the payments received by him were made directly by the recipients of these services/tasks present in Switzerland to him and as compensation for such services/tasks rendered by him independent of employer and in his own capacity.
It is pertinent to mention here that the Ld. A.R has filed few additional evidence before the tribunal with a petition of request to take on record and the documents which has been filed by the assessee are as follows:
Assessment Year: 2016-17 Shri Puspendu Sekhar Nandy i) Tax withholding certificate issued by IBM Scgweiz AG from the period of 01.01.2015 to 31.12.2015. ii) Statement of Axis Travel Currency Cards.
We have gone through the petition filed by the assessee and find that the assessee filed a petition making request for admission of additional evidences under Rule 29 of ITAT Rules, 1963. The relevant portion of the petition is as follows:
The assessee has also filed another petition with a request for permission for place of additional evidence on records which are as follows:
Assessment Year: 2016-17 Shri Puspendu Sekhar Nandy 10. Now let us look the order passed by the Ld. CIT(A), the Ld. CIT(A) has dismissed the appeal of the assessee by observing thus:
The above discussion is without prejudice to the fact that, as discussed above, the appellant lay neither proved nor attempted to prove at any of his income was actually received by him outside India through the production of statement of bank account.
Before us additional evidence has been filed by the assessee. Though, the submission of the Ld. A.R is that the document which has been filed by the assessee is not strictly additional evidence as relief claimed but going over the order passed by the Ld. CIT(A) and on perusal of the additional evidence we find that the order passed by the CIT(A) for want of documents, so interest of justice demand to remit the appeal of the assessee before the Ld. CIT(A) for fresh adjudication after going over the additional evidences as well as judicial pronouncements as cited by the assessee. Accordingly, we set aside the order passed by the Ld. CIT(A) and the appeal of the assessee is remitted back to the file of Ld. CIT(A) for fresh adjudication with this direction to pass order after hearing the assessee, the documents filed by the assessee, and also going over the judicial pronouncements.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 15th May, 2025