DEEPAK KUMAR TODI,KOLKATA vs. DDIT, INTERNATIONAL TAXATION, CIRCLE-1(1), KOLKATA, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA (Before Sri S.S. Godara, Judicial Member & Dr. A.L. Saini, Accountant Member)

ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi..............…..............….……...........…………..……………….…...……..…..…….......Appellant 697, Salt Lake Block-A Kolkata – 700 069 [PAN : ACYPT 5218 D] Vs. DDIT, International Taxation, Circle-1(1), Kolkata...............……......…….....….…............Respondent Appearances by: Shri Subash Agarwala, Advocate, appeared on behalf of the assessee. Shri N.B. Som, Addl. CIT D/R. appearing on behalf of the Revenue. Date of concluding the hearing : January 16th, 2019 Date of pronouncing the order : April 16th, 2019 ORDER Per S.S. Godara, JM :-

This assessee’s appeal for Assessment Year 2011-12 arises against the Commissioner of Income Tax (Appeals)- 22, Kolkata’s order dated 24/3/2017 passed in appeal No. 139/CIT(A)-22/2011-12/14-15/Kol, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

3 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

4 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

5 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

6 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

7 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

8 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

9 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

10 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

11 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

12 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

13 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

14 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

`

15 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

16 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

17 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

18 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

19 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

20 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi

21 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi statement showing details of remittance, copies of inward remittance, transaction advices, statement of NRE account maintained with Axis Bank and copy of the necessary certificate issued by M/s Galt Trading Pvt. Ltd; stands perused. There is no dispute about the basic relevant fact that the assessee has rendered his services in Nigeria giving rise to the tax in inward remittance in issue. The Revenue seeks to tax the same on account of three folded reasoning i.e., the said income has neither been taxed in Nigeria nor in India, the amount has been received in India and therefore taxable on receipt basis. The CIT(A) has admittedly relied upon this tribunal’s co-ordinate bench’s decision (supra). Mr. Som, vehemently contends during the course of hearing that both the lower authorities have rightly invoked receipt principle r.w.s. 5(2) of the Act in coming to the conclusion that the assessee’s remittance on account of salary for services rendered in Nigeria is taxable in India. We find no merit in either of these arguments. The assessee’s paper book reveals that the employer/payer i.e., De United Food Industries Ltd. had indeed deduced TDS amounting to Naira 250000 from his salary and bonus in Nigeria which stood credited to the said Government account. It is therefore not a case of double non taxation as argued at the Revenue’s behest. It thereafter transpires that the hon’ble jurisdictional high court’s decision in the case of Utanka Roy vs. DIT(supra) holds that the salary income for services rendered outside India has to be considered as income accrued and received out of India is not taxable in India vide following detailed discussion:- “6. I have considered the rival contentions of the parties and the materials made available on records. 7. The petitioner is an Indian citizen. He is an income tax assessee. He has filed a return for the assessment year 2011-2012 with the Income Tax authorities. The petitioner claims to be an engineer and to be engaged as such by a foreign company. The petitioner claims that, he has worked as an engineer with the foreign company for 286 days during the assessment year. He has filed income tax return for the assessment year disclosing an income of Rs. 5,63,850/-. He has thereafter received an assessment cum intimation notice under Section 143(1) of the Income Tax Act, 1961. He has applied under Section 264 of the Income Tax Act, 1961 against such intimation under Section 143(1). In course of hearing of the proceedings under Section 264, the petitioner has claimed that, he has received Rs. 27,92,417/- from his employer during the assessment year in question instead of the sum of Rs. 5,63,850/-.

22 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi 8. The proceedings under Section 264 of the Income Tax Act, 1961 was disposed of by the impugned order dated September 25, 2013. There are two parts to the impugned order. The first part finds the petitioner's income to be assessable under the Income Tax Act, 1961. It, however, does compute the tax liability. The Second portion relates to the exemption receivable by the petitioner and notes that, such exemptions have not been claimed by the petitioner. It ultimately allows the assessing officer to take necessary action. 9. The contention on behalf of the petitioner that, in the present facts, the petitioner is exempt from payment of income tax requires consideration. 10. Scope of total income is laid down in Section 5 of the Income Tax Act, 1961. Sub-Section (1) deals with income to a person who is resident in India while Sub-Section (2) deals with income of a person who is a non- resident. The petitioner is a non-resident Indian. He is guided by Section 5(2) of the Act of 1961. Section 5(2) of the Act of 1961 is as follows:— "(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1.- Income accruing or arising outside India shall not be deemed to be received I India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2.- For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India." 11. Explanation 1 to Sub-Section 2 states that, income accruing or arising outside India shall not be deemed to be received in India within the meaning of such section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2 clarifies that income will not be treated to be received in India solely on the basis that such income was received or deemed to be received in India. Therefore, it has to be found out where the income to the person concerned had accrued. For the purpose of finding out the place of accrual of the income, the place where the services have been rendered becomes material. In fact, the place where the income gave rise is

23 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi required to be considered to arrive at a finding whether the income was in India or outside India. 12. In Prahlad Vijendra Rao (supra) an income derived by a person working outside India for 225 days has been held not to have accrued in India. 13. In Avtar Singh Wadhwan (supra) it has been held that, the relevant test to be applied to decide whether the income accrued to a non- resident in India or outside is concerned, is to find the place where the services were rendered, in order to consider where the income accrued. The source of the income was not relevant for the purposes of ascertaining whether the income had accrued in India or outside India. 14. The question whether the petitioner has rendered services in India or not is a question of fact. It is not disputed that the petitioner as a marine engineer had rendered services outside India for the period of 286 days. He has received his remuneration for such work from a foreign company. Consequently, the income received by the petitioner for services rendered outside India has to be considered as income received out of India and treated as such. 15. There is anomaly in the quantum of income received by the petitioner during the period. In his income tax return he has initially stated that his income to be Rs. 5,63,850/- while in the proceedings under Section 264, he claims to have received a sum of Rs. 27,92,417/-. 16. In view of the finding that, the petitioner has received the remuneration from a foreign company for services rendered outside India, the quantum that he claims to have received, namely, Rs. 27,92,417/- has to be considered as such.”

24 ITA No. 1918/Kol/2017 Assessment Year: 2011-12 Deepak Kumar Todi Copy of the order forwarded to: 1. Deepak Kumar Todi 697, Salt Lake Block-A Kolkata – 700 069 2. DDIT, International Taxation, Circle-1(1), Kolkata