Receipts from outside India are outside the scope of Section 5(2) and do not fall within the ambit of Section 68 or 69A.

Here is an important ruling for Non- Resident in India for section 68 / 69A read with section 5, section 7 and section 9 of the Act by Hon’ble ITAT Delhi Bench in the case of Kuldeep Marwah vs. DCIT, International Taxation, Gurgaon [ITA No. 590/Del/2024, AY 2018-19 vide order dated 06.06.2025]:

1. Reopening of Assessment:
The assessment was reopened under Section 147 based on Risk Management Strategy (NMS case) inputs, as the assessee had not filed an ITR despite significant financial transactions (e.g., mutual fund investments, cash deposits, time deposits).

2. Key Transaction in Dispute:
The Assessing Officer (AO) questioned a sum of ₹28,69,580/- received from one Ms. Luo Jianxia of Hong Kong, allegedly as repayment of a loan earlier advanced by the assessee.

3. AO’s Adverse View:
AO taxed the said amount under Section 69A read with Section 115BBE, citing the assessee’s failure to submit bank statements or documentary evidence proving the initial advancement of the loan.

4. DRP’s Observations:
DRP admitted the confirmation from Ms. Luo Jianxia as additional evidence but upheld the AO’s addition due to lack of supporting bank documentation, holding that mere confirmation was insufficient.

5. Assessee’s Key Argument:
The assessee, a resident of South Africa, argued that the money was repatriated from abroad as repayment of a loan given outside India and hence, not taxable in India.

6. Documentary Support Filed:
The assessee furnished a confirmation letter from the borrower attested by the Hong Kong High Court and South African tax clearance certificates confirming his residency and tax status.

7. ITAT’s Finding on Source of Funds:
ITAT observed that the assessee had no other taxable income source in India, and the amount was remitted from abroad. Therefore, it could not be taxed in India in the absence of a nexus with Indian income.

8. Legal Interpretation:
The Tribunal held that such receipts from outside India are outside the scope of Section 5(2) (income deemed to accrue/arise in India to non-residents) and do not fall within the ambit of Section 68 or 69A.

9. Reliance on Judicial Precedents:
ITAT relied on rulings such as Finlay Corporation Ltd. (Delhi HC), Russian Technology Centre Pvt. Ltd. (Delhi ITAT), and others to hold that unexplained foreign remittances to non-residents without domestic nexus are not taxable in India.

10. Final Verdict:
The ITAT deleted the addition of ₹28,69,580/- and allowed the appeal in favour of the assessee, holding that the addition was unsustainable in law and on facts.

The copy of the order is as under:

1749639899627