Dr. S. Muthian v. ACIT – [2021] 124 taxmann.com 339 (Madras)

Short Overview: 

Assessee was employed in Google India Private Limited.

 He was not ordinarily resident in India (NOR) in accordance with the provisions of Section 6.

During the year, he had income arising outside India, viz., income from the sale of stock options given by his former employer Google Inc.

There was an error in Form-16 issued by his employer, as it erroneously included the income arising outside India as part of the taxable income and deducted tax thereon.

Assessee filed return of income and reported said income as exempt income and claimed refund.

 Assessing Officer (AO) treated the said income as taxable income of assessee as same was shown as a perquisite by the employer under Form 16.

On appeal, both CIT(A) and ITAT confirmed the order of AO.

Therefore, the assessee filed an instant appeal before the High Court.

It was submitted by the assessee that as per Section 5(1) of the Income-tax Act, he comes under the category of NOR assessee and is liable to pay tax only on income earned in India.

 Thus, income which accrues or arises outside India, viz., income from the sale of stock option given by Google Inc. cannot be taxable in India.

The High Court held that since the NOR status and the purchase of stock option by assessee is a mixed question of fact and law, the matter is required to be remanded back to AO to give one more opportunity to assessee.

Accordingly, the order passed by ITAT was set aside and the matter was remitted back to AO for deciding the matter afresh on merits and in accordance with the law.