AYYANNAN CHAKKARAVARTHY,CHENNAI vs. ITO INTERNATIONAL TAXATION 1(1), CHENNAI

Ld.Counsel for the assessee submitted that assessee had claimed salary of Rs.30,00,457/- credited to his Non-Resident Orindary (in short “NRO”) account in India as exempt from tax. As per the Ld.AR, assessee was employed with one M/s.Global United Shipping Pvt. Ltd., and was serving as Marine Engineer in a Ship called MV JAL VAHINI in International Waters. Further, as per the Ld.AR, assessee was outside India for 243 days and therefore, was a Non-Resident during the previous year relevant to the impugned Assessment Year. According to the Ld.AR, the salary credited to the NRO A/c was for services rendered outside India, and assessee had claimed exemption for such salary. However, as per the Ld.AR, Ld.Assessing Officer relying on Sec.5 of the Income Tax Act, 1961 (in short “the Act”) had held that income once received in India, became taxable in India irrespective of the source from which it was derived and the residential status of the assessee. As per the Ld.AR, Ld.AO took a view that the salary having been credited by the employer directly into assessee’s bank account, it came to the assessee in India and hence it was taxable in India. According to the Ld.AR, the Ld.AO had relied on a decision of Kolkatta Bench in the case of Shri Tapas Kumar Bandopadhyay Vs. DCIT (2016) 159 ITD 309. Submission of the Ld.AR was that the Ld.CIT(A) confirmed the addition without accepting the contention of the assessee that he was employed through an agent Company and such agent Company was acting as a Service Provider for a shipping Company in which assessee was carrying out his official duties. :- 3 -:

Continuing his submissions, Ld.AR submitted that subsequent to the decision of the Kolkatta Bench in the case of Shri Tapas Kumar Bandopadhyay (supra), the Central Board of Direct Taxes had come out with a Circular dated 11.04.2017, wherein, it was clarified that salary received by a sea-farer in an NRI A/c maintained in India, would not be taxable in India. Thus, as per the Ld.AR, assessee should be given the benefit of the above CBDT Circular.

Per contra, Ld.DR supporting the orders of the authorities below submitted that the decision of the Kolkatta Bench in the case of Shri Tapas Kumar Bandopadhyay (supra), was on very similar facts. According to him, lower authorities were, therefore, justified in making the addition for the salary.

I have considered the rival contentions and perused the material placed on record carefully. It is not disputed that assessee was a Non- Resident during the previous year relevant to the impugned Assessment Year. It is also not disputed that salary was credited by the employer of the assessee to his NRO A/c in India. This salary was received by the assessee for services rendered by him in a Ship which was in International Waters, and assessee was outside India for more than 243 days. No doubt, the Kolkatta Bench of this Tribunal in the case of Shri Tapas Kumar Bandopadhyay (supra), had held that an assessee could not claim any exemption for salary received in India even if his status was that of a Non- :- 4 -:

The matter has been examined in the Board. Section 5(2)(a) of the Income-tax Act provides that only such income of a non-resident shall be subjected to tax in India that is either received or is deemed to be received in India. It is hereby clarified that salary accrued to a non-resident seafarer for services rendered outside India on a foreign ship shall not be included in the total income merely because the said salary has been credited in the NRE account maintained with an Indian bank by the seafarer.

Vide its Grounds 6 & 7, assessee is aggrieved on an addition of Rs.7,90,000/-, considered by Ld.AO as unexplained cash credit.

The Ld.AR did not advance any arguments on these grounds raised by the assessee. Hence, these grounds are dismissed as not argued.

In the result, the appeal filed by the assessee is treated as partly allowed.