The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has ruled that the income tax is not liable to be paid on services provided abroad by non-residents deputed by Indian employers.
The bench of Saktijit Dey (Vice President) and B. R. R. Kumar (Accountant Member) noted that from the concurrent reading of Section 5 of the Income-tax Act, 1961, which deals with the scope of total income, section 15 deals with total income calculation beneath the head salary and changeability thereof, and Section 9 that deals with the income emerging in India concerning the salaries along with the services provided in India, no tax levied shall emerge on the salary/allowances obtained via taxpayer as the taxpayer is a non-resident and has provided the services outside India.
Under Section 139 of the Income-tax Act, 1961 the petitioner has furnished its income return reporting an income of Rs 9,76,960. The taxpayer does not declare distinct allowances obtained from M/s Datamatics Global Services Ltd. which stands on Rs. 21,80,932 in his income return.
Under Sections 147 and 148 of the Income Tax Act, the proceedings were initiated via issuing a notice under section 148 post receiving the required approval of the Competent Authority under Section 151 of the Income Tax Act.
On account of salary and allowances, the assessing officer made additions since the taxpayer does not provide the tax residency certificate (TRC). The taxpayer was an employee of M/s Datamatics Global Services Ltd., an Indian company, deputed to work on a project awarded by the IAEA in Vienna, Austria, and stationed in Vienna. He was a non-resident.
The company in India was paid the salary and the compensatory allowances to the taxpayer in Vienna. Through a credit card, the allowances were allowed to be used, which is valid exclusively in Austria.
The taxpayer does not have any rest period or any leave period, which was preceded and succeeded via services furnished outside India, the taxpayer argued. The salary could not get levied to tax in India as the taxpayer has provided the services outside India.
Read Also: A Complete Taxation Guide to Non-residents as Per I-T Act
The tribunal permitting the taxpayer petition ruled that salary and the allowances obtained via the taxpayer are not levied to tax in India since the services furnished were outside India.
| Case Title | Devi Dayal Vs The DCIT/ACIT |
| Case No. | ITA Nos. 835 & 836/Del/2023 |
| Date | 18.01.2024 |
| Counsel For Appellant by | Ms.Pallavi Talavlikar, Shri Anish |
| Counsel For Respondent | Sh. P. Praveen Siddharth |
| Delhi ITAT | Read Order |