Lohitakshan Nambiar, Bangalore vs Department Of Income Tax on 31 August, 2009

Lohitakshan Nambiar, Bangalore vs Department Of Income Tax on 31 August, 2009

Page 1 of 5                          1      ITA No.1045/Bang/2009

        IN THE INCOME TAX APPELLATE TRIBUNAL,

                 BANGALORE BENCH 'A'

         BEFORE SHRI GEORGE GEORGE K., J.M. AND

            SHRI A MOHAN ALANKAMONY, A.M.

                       ITA No.1045/Bang/2009

                         (Asst. year 2006-07)

The Income Tax Officer,

(Intl. Taxn.), Ward-1(3),

Bangalore.                                           - Appellant

Vs

Mr. Lohitakshan Nambiar,

480, Ramya Kaval Byrasandra,

R T Nagar, Bangalore-32.                             - Respondent

       Appellant by              :       Smt. Jacinta Zimik Vashai

       Respondent by             :       Shri Chandrashekar

                                 ORDER

PER GEORGE GEORGE K:

This appeal of the revenue is directed against the CIT(A)'s order dated 31.8.2009. The assessment year concerned is 2006-07.

2. The effective grounds raised reads as follows:-

i) The learned CIT(A) erred in disallowing the addition made by AO thereby disregarding the actual position as per the provisions of sec.5(2).

ii) The learned CIT(A) erred in holding that the decision of Hon'ble ITAT, Calcutta Bench in the case of Ranjit Kumar Bose v ITO reported in 25 TTJ 368 is applicable to the case on hand.

 Page 2 of 5                         2        ITA No.1045/Bang/2009

              iii)    The learned CIT(A) erred in holding that the

decision of Bombay High Court in the case of CIT v Avtar Singh Wadhvan is applicable in the instant case.

iv) The learned CIT(A) erred in holding that the services were clearly rendered outside India and the income accruing or arising outside India is not taxable in India.

v) The learned CIT(A) erred in appreciating the facts that though the income accrued and arised outside India it was received in India and thus it is an Indian income taxable in India within the provisions of sec.5(2) of the I T Act, 1961.

3. The facts in brief are as follows:-

The assessee is an indivudal, was working on board the vessel "MT Endeavor", an Ocean Liner belonging to M/s Barber Ship. The assessee had stayed outside India for 222 days and hence was assessable as a non-resident. The salary of the assessee was paid by the employer M/s Barber Ship, Malaysia directly to the assessee on board the ship. At the request of the appellant, certain portion of the salary paid to the assessee aboard the ship was credited by the employer company to his NRE account at Bangalore. The assessee explained during the course of assessment proceedings that the salary was received outside India and thereafter deposited in the Bank account of the assessee by the assessee's employer on instructions from the assessee. The Assessing Officer did not accept the submission made on behalf of the assessee and concluded that the amounts aggregating Rs.9,44,450/- credited to the NRE account of the assessee represented income received in India and were, therefore, liable to Page 3 of 5 3 ITA No.1045/Bang/2009 tax u/s 5(2) of the Act. The conclusion of the AO was based on the following reasons:-

• The income of the assessee is Indian income as it is received or deemed to be received in India, though it accrued or arose outside India. Indian income is always taxable in India irrespective of the residential status of the taxpayer. 

• The assessee has not offered his salary income for taxation in any other country.

• The provisions of the Double Taxation Avoidance Agreement (DTAA) apply only when the taxpayer is resident of one or both the Contracting States. As the assessee is admittedly not a resident in any country, no DTAA can be applied to the case of the assessee. Nor is the assessee entitled to any relief u/s 91 of the Act.

4. On appeal, the CIT(A) allowed the plea of the assessee for his detailed reasoning mentioned in para 5.3, 5.3.1 and 5.3.2 of his order.

5. Revenue, being aggrieved for redressal, is in appeal before us.

6. The learned DR strongly relied on the finding the Assessing Officer.

7. Per contra, the learned AR submitted that the issue in question is squarely covered by the order of the Tribunal in ITA No.1137/Bang/2008 dated 26.6.09 wherein identical factual matter was considered.

Page 4 of 5 4 ITA No.1045/Bang/2009

8. We have heard the rival submission and perused the material on record. In the instant case, the undisputed fact is, salary was received from the employer M/s Barber Ship aboard and a portion of the same was remitted to the assessee's NRE account in Bangalore through telegraphic transfers. The Tribunal in the case of Mr. Prahlad Vijendra Rao in ITA No.1137/08 supra in identical circumstances has held as follows:-

"We have heard the rival submission and perused the material on record. We are of the view that AO has wrongly construed the provision of section 5(2)(a) of the Act while holding that the salary income was received in India and hence taxable. Salary income is taxable on accrual basis under section 15 of the Act. In other words, salary due is taxable when it is receivable by the assessee regardless of the fact that the salary has been actually received or not. It is only advance salary that is taxable on receipt basis as an exception to the ruling that salary is taxable on accrual basis. The assessee has rendered services to M/s Live Stock Transport and Trading Company, which is a Kuwait company. The assessee has rendered the services on board the Ocean Liner to the said company and assessee was staying outside India for more than 182 days. The salary payable to the assessee is on broad the Ocean Liner and the salary is not payable in India. It is only the receipt of the salary that is in India on instructions of the assessee to credit the salary in the bank account of the assessee in India. In this context, Hon'ble ITAT Calcutta Bench in the case of Ranjit Kumar Page 5 of 5 5 ITA No.1045/Bang/2009 Bose reported in 25 TTJ 368 under similar factual matrix has held that the salary accrued outside India cannot be taxed in India merely because it is received in India. The ratio of the said decision is squarely applicable to the facts of the present case".

9. The facts being similar, respectfully following the coordinate bench of the Tribunal cited supra, we hold that the order of the CIT(A) is correct and in accordance with law and no interference is called for.

10. In the result, the appeal filed by the revenue is dismissed.

The order is pronounced on 12th April, 2010.

           Sd/-                               Sd/-

      (A MOHAN ALANKAMONY)                (GEORGE GEORGE K)

        ACCOUNTANT MEMBER                  JUDICIAL MEMBER

Copy to : 1) The Assessee (2) The Revenue (3) The CIT(A) concerned. (4) The CIT concerned. (5) The DR (6) Guard File. (7) Guard File, New Delhi.

MSP/31.3                                       By Order

                                Asst. Registrar, ITAT, Bangalore.