DDIT(IT)-1(1), KOLKATA, KOLKATA vs. MR. GAUTAM BHATTACHARYA, KOLKATA

Appearances by: None, appeared on behalf of the assessee. Shri N.B. Som, Addl. CIT, DR, appearing on behalf of the Revenue. Date of concluding the hearing : December 7th, 2017 Date of pronouncing the order : January 19th, 2018

O R D E R Per J. Sudhakar Reddy :-

This appeal filed by the revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals)-VI, Kolkata, (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 04/08/2014, for the Assessment Year 2011-12.

2. Facts in brief:- The assessee, in this case is an individual and is employed as the Managing Director and Chief Operating Officer in a Nigeria based company. He was a non- resident and was working in Nigeria. The undisputed fact is that the assessee has rendered services in Nigeria and the salary was accrued and due in Nigeria. Part of the salary was received by the assessee in his bank account in India. The Assessing Officer was of the view that this account is taxable in India, u/s 5(2)(a) r.w.s. 15(a) of the Act.

2 Assessment Year: 2011-12 Mr. Gautam Bhattacharya 2.1. On appeal, the ld. First Appellate Authority, applied the decision of the Jurisdictional Bench of the Tribunal in the case of Ranjit Kumar Bose vs. ITO, [1986] 225 TTJ 86 (Kol. Trib.), and the decision of the Hon’ble Karnataka High Court in the case of Director Of Income Tax vs Sri Prahlad Vijendra Rao [2011] 98 taxmann 551 (Karnataka), and held that salary for service rendered outside India, cannot be brought to tax on India on receipt basis.

"Subject: Clarification regarding liability to income-tax in India for a non-resident seafarer receiving remuneration in NRE (Non Resident External) account maintained with an Indian Bank. Representations have been received in the Board that income by way of salary, received by non-resident seafarers, for services rendered outside India on-board foreign ships, are being subjected to tax in India for the reason that the salary has been received by the seafarer into the NRE bank account maintained in India by the seafarer.

6. We concur with the ratio of the decision of the Karnataka High Court and in our opinion the interpretation be given to sub Section (b) of Section 5(2) of the Act would also apply to Section 5(2)(a) of the Act. The Circular is clarificatory in nature and is applicable for construing the aforesaid provision for the relevant assessment year. In our opinion the authorities under the Income Tax Act did not properly apply the provisions of law to the case of the assessee. We are of the view that the Assessing Officer was wrong in adding the aforesaid sum to the income chargeable to tax of the assessee for the relevant assessment year. We accordingly allow the appeal and answer the question framed by us in favour of the assessee.”

2. DDIT (IT)-1(1), Kolkata Room No. 210 2nd Floor, Aayakar Bhawan Poorva 110, Shanti Pally Kolkata – 700 107

3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata.