Foreign allowance for services rendered outside India is not taxable in India: ITAT Kolkata

 

Santanu Sanyal Vs ACIT (ITAT Kolkata)

Appeal Number : I.T.A. No. 41/KOL/2024

 

Facts:

1.  The appellant, a non resident, filed his return of income declaring taxable income at Rs. 2,55,640/- after claiming a deduction of INR 2,19,372/- under Chapter VI-A of the Act. AO assessed income at INR 1,15,28,610/-.

2.  When an employee of IBM is sent on international assignment, Axis Bank upon instruction from IBM issues an Axis travel currency card to an employee who is sent to a foreign assignment. Upon instruction from IBM the funds are transferred from the Nostro Account of Axis Bank maintained outside India to the Axis travel currency card of the respective employee.

3.  The AO disallowed the exemption claimed by the appellant under Article 61 of the India-UK Double Taxation Avoidance Agreement amounting to INR 57,93,857/-.

 

ITAT Kolkata held as below:

1.  It very clear that the funds are credited from outside India and the Appellant is also in first receipt of the foreign assignment allowance outside India, i.e., both the payment and first receipt of foreign assignment allowance is outside India.

2.  The appellant qualified as a Non-resident in India during the Previous 2015-16 as evident from his stay in India during the relevant PY. A non-resident would be taxable in India only in respect of income received/deemed to be received in India or the income accrued / deemed to accrue in India.

3.  In the present case the Appellant being a Non-Resident, has received the foreign allowances of INR 48,39,078 in United Kingdom for services rendered in United Kingdom.

4.  Hence we are in this view that the foreign allowance of INR 48,39,078 does not fall within the scope of total income under section 5(2) of the Act.

The copy of the order is as under:

1721731512-ITA 41-KOL-2024 ASS(PA) Shri Santanu Sanyal B MB-PKC 04.06.24-23.07.24