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2024 Supreme(Online)(ITAT) 2307
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
Dr. B. R. R. Kumar, ACM, Sh. Anubhav Sharma, JM
Nokia Solutions and Networks India Private Limited – Appellant
Versus
Assessee – Respondent
ITA No. 391/Del/2023
For the Appellants/Petitioners: Ms. Preeti Goel
For the Respondents: Sh. Vizay B. Vasanta
Salary received for employment exercised outside India is not taxable in India if exemption conditions under the India-Australia DTAA are met.
Headnote:(A) Income Tax Act, 1961 - Sections 5, 9, 15, 90 - India-Australia DTAA - Article 15(1) - Exemption of salary income claimed by Assessee for employment exercised in Australia - Assessee qualified as Non-Resident in India and Resident in Australia - Court held that salary received for services rendered outside India is not taxable in India if exemption conditions are satisfied. (Paras 31 to 36)
(B) Tax Residency Certificate - Rejection by AO based on absence of TRC - The court noted that alternate evidence of residency was provided, supporting the Assessee's claim for exemption under the DTAA. (Paras 27, 28)
Facts of the case:
The Assessee argued exemption on salary received under the India-Australia DTAA for services rendered in Australia during their employment with Nokia Australia, supported by evidence of residency and tax paid in Australia.
Findings of Court:
The Court found the Assessee to be a Non-Resident in India under Section 6(1) of the Act and held that received salary for employment in Australia was exempt under the DTAA.
Issues: Determining tax residency of Assessee and applicability of the India-Australia DTAA.
Ratio Decidendi: The court ruled that the salary received in India for employment exercised in Australia, provided the Assessee had residency in Australia and met necessary conditions under the DTAA, is not taxable in India.
Result: The appeal of the assessee is allowed.
| Table of Content |
|---|
| 1. tax residency of assessee under indian and australian law. (Para 4 , 5 , 6) |
| 2. arguments presented against the denial of exemption based on provided evidence. (Para 15 , 18 , 20 , 21) |
| 3. conditions to claim exemption under the india-australia dtaa. (Para 27 , 31) |
| 4. final ruling in favor of the assessee. (Para 36) |
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order dated 21.12.2022 passed by the AO u/s 143(3) r.w.s. 144C(13).
2. Following grounds have been raised by the assessee:
“1. The learned Assessing Officer has in pursuance of the directions of the Hon'ble DRP, in the facts and circumstances of the case and in law erred in issuing the impugned Final Assessment Order dated 21 December 2022 under Section 143(3) read with Section 144C(13) of the Act disallowing the exemption of INR 55,37,591 claimed by the Appellant under Article 15(1) of the India- Australia Double taxation Avoidance Agreement (DTAA) read with Section 90 of the Act in ignorance of the facts, documentary evidence, statutory provisions and judicial precedents cited.
2. The learned Assessing Officer and Hon’ble DRP has in the facts and circumstances of the case and in law erred in disallowing the exemption claimed under Article 15(1) of the India -Australia DTAA read with Section 90 of the Act on the following erroneous conclusions/ premises:
a. The Assessee exercised his employment in India.
b. Employment was based in India throughout the Australia assignment period.
c. Control and management of the employment was in India
d. Source of salary income was in India
e. Salary and expenses during the assignment were borne by Nokia India
f. Salary received from Nokia India accrued/ arose in India under section 9 of the Act.
g. No concrete evidence was provided to show that the Assessee was Tax Resident of Australia.
3. The learned Assessing Officer and the Hon’ble DRP has in the facts and circumstances of the case and in law erred in applying Article 15(2) of India - Australia DTAA instead of the applicable provisions of Article 15(1) of the DTAA read with Section 90 of the Act.
4. Without prejudice, the learned Assessing Officer and the Hon'ble DRP has in the facts and circumstances of the case and in law erred in holding that the Salary income received in India is taxable in India under Section 5 (2)(a) read with Section 9 (1)(ii) of the Act and Explanation thereto.
5. The learned Assessing Officer has in the facts and circumstances of the case and in law erred in adding back the refund (including the interest under Section 244A if any) of INR 14,994 issued to the Appellant.
6. The learned Assessing Officer has in facts and circumstances of the case and in law erred in initiating penalty proceedings under Section 270A of the Act for alleged under-reporting of income.”
3. Heard the arguments of both the parties and perused the material available on record.
4. During Assessment year 2020-21, the Assessee an employee of Nokia Solutions and Networks India Private Limited (‘Nokia India’) was on an overseas assignment to Australia and was exercising employment by rendering services in Australia with Nokia Australia from 23 August 2017 to 10 March 2020 and also placed in Australia. While working with Nokia Australia, the Assessee was based in and was physically present in Australia during the F.Y. 2019-20.
5. The Assessee was in India for less than 60 days during F.Y. 2019-20 and qualified as a Non-Resident in India as per Section 6 (1) of the Act. The Assessee qualified as Tax Resident of Australia for the Tax Year (TY) 2018-19 and TY 2019-20. As the Assessee qualified as a Resident of Australia under the domestic tax law of Australia for the TY 2018- 19 and TY 2019-20, and Non-Resident of India.
6. Accordingly, the Assessee qualified as a Resident of Australia as per Article 4(1) of India- Australia Double Taxation Avoidance Agreement (DTAA) between India and Australia for the F.Y. 2019-20. The relev
