ACIT(IT), CIR-1(1), KOLKATA, KOLKATA vs. SHRI AYAN MAJUMDAR, KOLKATA

1. This appeal by the Revenue arises out of the order of the Learned Commissioner of Income Tax(Appeals)-22, Kolkata [in short the ld CIT(A)] in Appeal No.75/CIT(A)- 22/Kol/16-17 dated 26.05.2017 against the order passed by ACIT(IT), Circle-1(1), Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 19.12.2016 for the Assessment Year 2014-15.

2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the addition made in the sum of Rs 66,38,022/- which was brought to tax by Shri Ayan Majundar A.Yr. 2014-15 the ld AO by applying the provisions of section 5(2)(a) of the Act, in the facts and circumstances of the case.

3.1. During the financial year 2013-14 , the assessee qualifies to be a tax resident of United Kingdom (UK). As per the provisions of Article 16(1) of the India-UK Double Taxation Avoidance Agreement (DTAA) , salary earned by a UK tax resident is taxable only in UK. Accordingly, the assessee claimed exemption of Rs 66,38,027/- as per Article 16(1) of India-UK DTAA. The assessee pleaded that the entire foreign allowance of Rs 75,68,505/- was not offered to tax in India as the same was received by the assessee outside India for the services rendered outside India which does not form 2

Shri Ayan Majundar A.Yr. 2014-15 part of the total income u/s 5(2) of the Act. The assessee also claimed relief under Article 16(1) of India UK DTAA in respect of salary received in India amounting to Rs 66,38,027/-. The ld AO denied the relief claimed in the sum of Rs 66,38,027/- under India – UK DTAA and brought the same to tax while completing the assessment.

4.1. We find that the provisions of Article 16(1) of India-UK DTAA reads as under:- ARTICLE 16 DEPENDENT PERSONAL SERVICES

Shri Ayan Majundar A.Yr. 2014-15 3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft in international traffic may be taxed in the Contracting State of which the person deriving the profits from the operation of the ship or aircraft is a resident.

4.2. It is not in dispute that the assessee is a non-resident in India and is a tax resident of UK during the year under consideration. It is not in dispute that his employment is exercised in UK. We find that the ld AO had denied the relief claimed under India –UK DTAA for not furnishing the tax residency certificate during the course of assessment proceedings. Admittedly, the same was furnished by the assessee before the ld CITA for the first time. The ld CITA without asking for a remand report from the ld AO in this regard, proceeded to grant relief to the assessee. We find that the revenue had raised one of the ground on account of violation of provisions of Rule 46A of the Income Tax Rules with regard to the tax residency certificate furnished only before the ld CITA. Hence in the interest of justice and fairplay, we deem it fit and appropriate, to remand this issue to the file of ld AO , for the limited purpose of verification of the tax residency certificate furnished before the ld CITA. This was the only basis of denial of claim of assessee by the ld AO in the assessment. If on verification of the same, the ld AO is satisfied regarding the claim of the assessee, then the assessee should be granted the relief. Accordingly, the grounds raised by the revenue are allowed for statistical purposes.