Shri Tapas Kumar Bandopadhyay, ... vs Assessee on 1
June, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH: KOLKATA
[Before Shri N. V. Vasudevan, JM
& Shri M. Balaganesh, AM]
I.T.A
No.70/Kol/2016
Assessment Year:
2010-11
Shri
Tapas Kr. Bandopadhyay
Vs. Deputy Director of
Income-tax, (PAN:
(PAN:
ADZPB9416H)
(International Taxation)-3(1), Kolkata
(Appellant)
(Respondent)
Date of hearing: 18.04.2016
Date of
pronouncement: 01.06.2016
For the Appellant: Shri
Manoj Kataruka, Advocate
For the Respondent: Shri
A. H. Choudhury, JDIT
ORDER
Per Shri M. Balaganesh, AM:
This appeal by assessee is arising out
of order of CIT(A)-22, Kolkata vide Appeal No. 102/CIT(A)-22/Kol/14-15 dated
02.11.2015. Assessment was framed by DDIT- 3(1) (IT), Kolkata u/s. 143(3) of
the Income-tax Act, 1961 (hereinafter referred to as
"the Act") for Assessment Year 2010-11 vide his order dated
07.02.2013.
2. The only issue to be decided in this
appeal of assessee is as to whether the remuneration received by the assessee
in the sum of Rs.14,79,598/- which was directly remitted from foreign to the
NRE account of assessee by the foreign company could be brought to tax in the
facts and circumstances of the case.
3. The basic facts are that the
assessee is a non resident individual and for the AY under appeal i.e. 2010-11
return was filed on 12.08.2010 declaring total income at Rs.3,95,099/-. The
assessee is a Marine Engineer and was engaged with M/s. Great Offshore Ltd. and
M/s. Bibby/Ship Management (Singapore) Pte. Ltd. in the capacity as a Marine
Engineer. At the time of assessment proceedings the Ld. AO observed that the
assessee worked in International Waters during the FY 2009-10 relevant to AY
2010-11 and received remuneration from two concerns i.e. (i) M/s. Great
Offshore Ltd. Rs.26,73,772/- and (ii) M/s. Bibby Ship Management (Singapore)
Pte. Ltd. Rs. 6,60,100/-. Out of the above receipts the assessee claimed
following income as exempt:
(i)
M/s. Great Offshore Ltd. Rs.20,28,671/-
Tapas Kr. Bandopadhyay AY
2010-11
(ii) M/s. Bibby Ship Management
(Singapore) Pte. Ltd. Rs. 6,60,100/-
4. The assessee stated that the above
income was received from outside India in foreign currency and, therefore,
claimed as exempt. The assessee stated that he used to get his contract to do
service with Indian / foreign shipping company through Indian agent and that
contract were executed in India duly signed by the agent in India and himself
before joining the ship. But he has to float on foreign water to render
services during the course of voyage and accordingly when he will stay more
than 182 days outside India or on foreign water, his residential status will be
treated as 'Non-resident' as per provision of law and his salary income which
are received outside India in foreign currency also will not be taxable u/s 5
of the Act. The Ld. AO accepted the residential status of the assessee as
non-resident after verification of copy of passport and other details
submitted. The assessee claimed that as per provision of law, salary income,
which is received outside India in foreign currency will not be taxable u/s. 5
of the Act. The Ld. AO issued show cause notice to the assessee as below:
"It appears from the bank accounts submitted
by you that you have received considerable amounts from persons outside India
in your NRE accounts maintained in India. These amounts are taxable in India as
per the provisions of section 5 of
the Income-tax Act. Section 5 of
the Income-tax Act states that the amount received in India is taxable in India
for a non-resident. The relevant part of Section 5 is reproduced as under.
5(2) Subject to the provisions of this Act, the
total income of any previous year of a person who is a non-resident includes
all income from whatever source derived which-
(a) is received or is deemed to be received in
India in such year by or on behalf of such person; or...
It is therefore apparent that the amount received
in India is taxable in India as per the Income-tax Act in
case of Non-residents."
5. The assessee replied to the show
cause notice as below:
"That I am a marine engineer and left India
during the financial year relevant to the assessment year 2010-11 for the
purpose of employment and I was 'Non-Resident' for the year in question as per
provision of section 6 of
the I.T. Act. That I have claimed exemption the income which were received by
me from outside India in foreign currency as per provision of section
5 of the Act. That I have transferred my
allotment, received in US$ from outside India to my NRE accounts in India with
Axis Bank and RBS Bank, thus it is crystal clear that the entire amount of
income in US$ were received by me from outside and that income in US$ shall not
be deemed to received in India and it is also to be submitted that other than
foreign currency any amount could not be deposited in NRE A/c.
That therefore the amounts which are credited in my
NRE A/cs in India were received outside and being "Non Resident' those
income were not taxable U/s 5 of the Act.
Tapas Kr. Bandopadhyay AY 2010-11 That I have
already filed the photocopy of the Bank statement of NRE & NRO A/cs with
Axis Bank and the photocopy of RBS Bank (NRE) is enclosed herewith)."
6. The Ld. AO examined the reply of the
assessee together with the bank statements of the assessee and observed that
sums of Rs.7,11,872/- and Rs.7,67,726/- were directly credited to Royal Bank of
Scotland NRE Account and Axis Bank NRE Account respectively totaling to
Rs.14,79,598/-. The Ld. AO further observed that regarding the assessee's
contention that these amounts received in foreign currency is not taxable in
India, it is stated that as per section 5(2)(a)of
the Act, which deals with the scope of income arising to a Non-resident, any
income of a Non-Resident received in India is taxable in India. The section
does not mention anything about Indian currency or foreign currency. The
section specifically stated that any income received or deemed to be received
in India is taxable in India. The only exception to this taxability is due to
the operation of Double Taxation Avoidance Agreements. In the assessee's case,
the assessee was not a resident of any other state as already stated by him.
Therefore, no DTAA is applicable on his income. He observed that the law states
income received in India is taxable in India in all cases (whether accrued in
India or elsewhere) irrespective of residential status of the assessee. He also
observed that it is significant to know the meaning of income received in
India. If the place, where the recipient gets the money (on first occasion)
under his control, is in India, it is said to be income received in India. In
the instant case all the income was remitted by the employer to the bank
accounts of the assessee maintained in India. Therefore, the assessee got the
money under its control for the first time in India. Accordingly, the AO added
a sum of Rs.14,79,598/- as income chargeable to tax in India.
7. On first appeal, the assessee argued
that he was a non-resident and no income was taxable in India as entire service
was rendered outside India. It was argued that assessee was under employment of
a foreign company i.e. M/s. Great Offshore Ltd. and Bibby Ship Management
(Singapore) Pte. Ltd. and services were rendered outside India and shipping
company does not have any permanent establishment in India. For the services
rendered by the assessee outside India the entire payment of salary was made by
the foreign company in US$ and remittance was made to the NRE account of the
assessee in India. The assessee claimed that the meaning of the word 'received
in India' within the meaning of section 5(2)(a) of
the Act should be interpreted only in the Tapas Kr. Bandopadhyay AY
2010-11 context of income received in Indian currency in India. There is a
distinction between receiving money and transfer of money. The distinction is
that where a foreign company makes payment to the non-resident for services
rendered outside India, the foreign company is transferring the money or
remitting the money in foreign currency to the assessee who is a non resident,
and the money is being received by the assessee not in India as because the
point of payment by the foreign company is in foreign land and the point of
receipt by the assessee should be taken from the point of payment. Mere
remittance or transfer of the payments by the foreign company in the NRE
account of the assessee in India that also in foreign exchange shall not be
considered as income received in India and any larger interpretation to the
section would render it otiose. The various arguments of the assessee were
summarized by the Ld. CIT(A) as below:
"a) The assessee is a non resident and
rendering services outside India.
(b) The payments are being made by a foreign
company outside India and the foreign company does not have any permanent
establishment in India.
(c) The point of payment is to be taken into consideration
for determining the provisions of clause 5(2)(a) of the Income
Tax Act and the point of payment shall be considered
as the point of receipt.
(d) It is immaterial that the payment is being transferred
by the foreign company or remitted by the foreign company to the NRE account in
foreign exchange in India as because payment have been made by the foreign
company outside India and the point of payment is to be taken as the point of
receipt.
(e) Without prejudice to the above the amount which
is received by the assessee from the foreign company is in foreign exchange and
therefore income cannot be said to have been received in India where payments
have been received in foreign currency.
(f) The provisions of Section
5(2)(a) has to be interpreted in the manner that it
does not render the section meaningless. If interpretation as made out by the
department is adopted, then definitely the section would be otiose and
meaningless as because no benefit would be given to the non residents even if
all the conditions have been satisfied.
(g) The true interpretation to the provisions
of section 5(2)(a) is that the
meaning which is to be adopted for income received or deemed to be received in
India, that the payments have been made in India in Indian currency and the
recipient of the payments has received the payments in Indian currency."
8. The Ld. CIT(A) not convinced with
the arguments of the assessee upheld the addition made by the Ld. AO.
Aggrieved, assessee is in appeal before us on the following grounds:
"1. That on the facts and in the circumstances
of the case the action of the Ld.ClT(A) to uphold the addition made by the AO
of Rs.1479598/- as income u/s 5(2) (a) of theIncome Tax Act is erroneous and contrary to the
material facts on record.
Tapas Kr. Bandopadhyay AY 2010-11
2. That on the facts and in the circumstances of
the case the action of the Ld. CIT(A) to uphold the action of the AO to bring
into tax an amount of Rs.1479598/- by treating it be received in India is based
on incorrect assumption of facts and wrong application of law.
3. That on the facts and in the circumstances of
the case the application of decision of Captain A.L.Fernandez vs. ITO 81
ITD 203 (Mum) (TM) by the Ld. CIT(A) to treat as income of Rs.1479598/- u/s
5(2) (a) of the Income Tax Act is
based on incorrect application of case law and the addition is arbitrary and
excessive.
4. That the order of the Ld. CIT(A) upholding the
order of the AO is arbitrary, excessive and unjustified and bad in law.
5. That the above grounds of appeal will be argued
in details at the time of hearing and the appellant craves leave to submit
additional grounds of appeal, if any, at or before the time of hearing."
9. The Ld. AR reiterated the submissions
made before the lower authorities. He argued that the facts in the present case
are squarely covered by the following decisions:
"i) DIT (International Taxation) Anr. Vs.
Prahlad Vijendra Rao reported in 239 CTR 107(Kar),
ii) CIT Vs. Avtar Singh Wadhwan reported in 247 ITR
260 (Bom) In response to this, the Learned DR argued that as per Section
5 of the Act, so far as non-residents are
concerned, total income includes all income from whatever source derived which:
i.
is received in India [section 5(2(a)], or
ii.
is deemed to be received in India [section 5(2(a)], or
iii.
accrues or arises to him in India [section 5(2(b)], or
iv.
is deemed to accrue or arise to him in India [section 5(2(b)].
Thus, total income of a non-resident can consist of
income from any source which is derived by way of any of these four modes. This
means, first of all, there has to be a source of income (the term 'in India' is
not mentioned in the context of such source of income) and then, income from
such a source will only get included in the total income of the non-resident
person through any of the four modes as described in section
5(2) of the Act. It is evident that all the four
modes stand on their own legs, otherwise the enactment will be rendered
redundant. Section 5(2)(b) mentions
the term 'accrues or arises to him in India'. There is no specific section in
the Act which deals with any income which accrues or arises to any person only
in India. In other words, there is no section in the Act which provides for a
charge on any income derived from any source Tapas Kr. Bandopadhyay AY
2010-11 on the basis of its accruing or arising specifically 'In India'. The
context of this term is provided by section 5(1)(c) which,
inter alia, mentions that the total income of a person resident in India
includes all income from whatever source which 'accrues or arises to him
outside India'. This is the reason that the main charging section, i.e. section
4, does not make any reference to the words 'in
India' as it has to provide a basis of charge for both - income which is
accruing or arising to a person in India as well as income which is accruing
and arising to a person outside India. The charging section does not have a
territorial bias. This is also the reason that neither does section
4 qualify a person as being resident or
non-resident, nor does the definition of 'person' given in section
2(31) of the Act qualifies it as such. Thus, the
charging section does not have a bias based on residency also. It will be shown
below that the separate charging sections for each head of income provided in
the Act also follow the same scheme as does the main charging section (section
4).
It was further argued by the Learned DR
that the main point of contention here, is whether the language of the statute
as contained in section 15(a) reflects
any locational preference. There is no such preference in section
15(a). Salary can become due to an 'assessee' anywhere
in the world. The moot question here is the meaning of the phrase 'due from an
employer ... whether paid or not'. This phrase was present in section
7(1) of the 1922 Act also. Hon'ble Supreme Court
of India had occasion to determine the meaning of this phrase in the case
of CIT vs L. W. Russel (1964), 53 ITR
91(SC). Hon'ble Apex Court held that:
"The expression "due" followed by
the qualifying clause "whether paid or not" shows that there shall be
an obligation on the part of the employer to pay that amount and a right on the
employee to claim the same."
Thus, as explicitly and unequivocally
determined by the Hon'ble Apex Court, the term "due" as qualified by
the phrase "whether paid or not" is connected with the contractual
right of the employee to receive his salary and nothing else. It has no
relation with location or place of services rendered or to where the amount has
become "due". Thus, what is important for charging an amount to tax
under section 15(a) is whether it is in the nature of
salary and whether it has become due to the assessee (whatever may be
his Tapas Kr. Bandopadhyay AY 2010-11 status - resident or non-resident)
and it has no relation to the place where it has become due. The place where it
has become due and the place where service has been rendered do not form a
basis of charge under section 15 of
the Act. Had the Parliament thought it relevant, the statute would have taken a
form which reflected such thought.
10. We have heard the rival submissions
and perused the materials available on record. The scheme of the Act is such
that charge of tax is made independent of territoriality and residency and
currency. The Ld. DR argued that the assessee though rendered services outside
India had received salary in India by way of fund transfer from foreign company
in abroad directly to NRE account of the assessee in India. The character of
receipt of salary does not change according to Ld. DR. He argued that the
receipt contemplated u/s. 5(2)(a) of the Act is actual receipt. Hence, income
which is actually received in India is taxable in India u/s. 5(2)(a) of the Act
and hence, the Third Member decision relied on by the Ld. CIT(A) is directly in
favour of the revenue. When the decisions of both Bombay and Karnataka High
Courts were put across to the Learned DR , he argued that both the Courts did
not frame question of law and it was rendered in the context of taxability u/s.
5(2)(b) of the Act and not section 5(2)(a) of
the Act. The Learned DR on the reliance placed by the Learned AR on the
decision of Agra Bench of ITAT in the case of Arvind Singh Chauhan, supra
argued that the said decision had not considered the Third Member decision,
cited supra and hence to be ignored.
10.1. We find that the assessee was
only trying to introduce one more layer to the entire transaction that the
assessee had the control over his money in the form of salary income in
international waters and for the sake of convenience, he instructed the foreign
employer to send the monies to his NRE account in India. It was argued by the
assessee that income was actually earned by the assessee outside India and
assessee had only brought those amounts into India. In other words, what was
brought into India is not the salary income but only the salary amount. But we
find that no evidence has been brought on record to prove that the assessee had
the control over his salary income in international waters. Moreover, we find
that if this argument of the assessee is to be Tapas Kr. Bandopadhyay AY
2010-11 accepted, then the assessee goes scot free from not paying tax anywhere
in the world on this salary income. The provisions of section
5(2)(a) of the Act are probably enacted
keeping in mind that income has to suffer tax in some tax jurisdiction . We
believe that such provisions would exist in tax legislation of all countries.
We hold that if the argument of the assessee is accepted, then it would make
the provisions of section 5(2)(a) of
the Act redundant. It is only elementary that a statutory provision is to be
interpreted ut res magis valeat quam pereat, i.e. to make it workable rather
than redundant. From the provisions of section 5(1) of
the Act, in the case of a resident, the global income is taxable in India. In
case of non-residents, the scope of total income has four modes, one of which
is receipt in India, 'from whatever source derived'. If this is construed to
mean that income from whatever source, should first accrue or arise in India
and then it should be received in India to be included under section
5(2)(a), then section 5(2)(a) will
lose its independence and will become a subset of section
5(2)(b) and there would not be any need for
having section 5(2)(a) on the statute.
10.2. We find that heavy reliance has
been placed by the Learned AR on the decision of the Hon'ble Bombay High Court
in the case of CIT vs Avtar Singh Wadhwan reported
in 247 ITR 260 (Bom) which was in turn followed by Hon'ble Karnataka High Court
in the case of DIT (Intl Taxn) vs Prahlad Vijendra Rao reported in 239 CTR 107
(Kar). We find that the question before the Hon'ble Bombay High Court was to
decide the place of accrual of income. The Court held that the income accrues
in the place where the services were rendered which was admittedly outside
India. We find that the Court did not have an occasion to deliberate upon the
fact that the receipt of the income has been in India as the issue decided by
them was only the place of accrual of income in the context of section
5(2)(b) of the Act. Hence the decision relied upon by
the Learned AR are factually distinguishable.
10.3. The argument of Learned AR was
that the salary was received on the high seas and by way of a convenient
arrangement , the same was directed to be deposited in the NRE account of the
assessee in India. The question that arises for consideration is can a person
receive salary on high seas. The only possibility of receiving salary on board
of Tapas Kr. Bandopadhyay AY 2010-11 a ship on high seas is to receive in
hot currency. It is not the case of the assessee that the hot currency got
deposited in the NRE account. On the other hand, the money was transferred from
the employer's account outside India to the assessee's NRE account in India. In
such circumstances, it is difficult to accept the contention of the Learned AR
that salary was not received in India. The decision rendered by the Agra
Tribunal in the case of Arvind Singh Chauhan vs ITO in
ITA Nos. 319 & 320/Agra/2013 dated 14.2.2014 is based on the decision
rendered by the Hon'ble Madras High Court in the case of CIT
vs A.P.Kalyankrishnan 195 ITR 534 (Mad) . The facts
before the Hon'ble Madras High Court were that the assessee in that case
received pension from the Malaysian Govt and claimed it as not taxable. The AO
found that the assessee received the pension in India through the Accountant General
Madras directly and hence the pension received is liable to tax in India on
receipt basis. The first appellate authority found that the pension amount
received by the assessee had been subjected to assessment in Malaysia in the
status of non-resident and that clearly pointed out that the pension had
accrued to the assessee only in Malaysia. It was further held that pension had
accrued to assessee only in Malaysia and the Accountant General Madras was
merely authorized to arrange for the payment of pension to the assessee
rendering the amount of pension received in India by the assessee not liable to
tax. On further appeal by the revenue, the Tribunal found that there was a
letter dated 23.6.1969 addressed by the Accountant General of the Federation of
Malaya to the Accountant General Madras and that letter indicated an
arrangement for payment in India and the circumstance that the pension of the
assessee had also been assessed to tax in Malaya in the status of non- citizen
and non-resident would clearly establish that the pension of the assessee had
been remitted to India by arrangement with the Accountant General Madras. On
further appeal, the Hon'ble Madras High Court firstly held that the Malaysian
Govt had assessed the assessee to income tax on the pension. The Hon'ble High
Court also found that the Malaysian Govt had deducted tax at source which
clearly indicated that the income had accrued to assessee in Malaysia and
therefore not assessable in the hands of the assessee in India. The Hon'ble
Court found that the accrual of pension and receipt of pension had already been
taken place in Malaya. The Hon'ble Court held that the letter dated 23.6.1969
addressed by the Accountant General Federation of Malaya Kuala Lumpur to the
Accountant General Madras was only intended as an arrangement for
the Tapas Kr. Bandopadhyay AY 2010-11 payment of pension to the assessee
and the said letter was couched in the form of a request , requesting payment
to the assessee to be made at the nearest treasury and the rate of exchange was
also indicated therein. Further the letter also stated that the payment
requested to be made was in respect of the pension payable to the assessee and
at the rate of exchange indicated therein and the amount so paid, should ,
according to the letter, be charged to the Govt of Federation of Malaya in the
usual manner. Taking note of the contents of the aforesaid letter, the Hon'ble
Court held that payment in India was only an arrangement to ensure the prompt
payment of pension which had already suffered tax in India. The Hon'ble High
Court therefore held that the income should be construed as having been
received outside India and the fact that the pension had been remitted or
transmitted to the place where the assessee was living was a matter of
convenience and that would not constitute receipt of pension in India by the
assessee falling within section 5(1)(a) of
the Act.
10.3.1. The above explanation would
clearly prove that the facts before the Hon'ble Madras High Court (supra) are
distinguishable from the facts of the present case in as much as the income in
the present case did not suffer tax in any other jurisdiction nor was it
received in any other tax jurisdiction. The receipt in the NRE account in India
is the first point of receipt by the assessee and prior to that it cannot be
said that the assessee had control over the funds that had deposited in the NRE
account from the employer.
10.4. The facts in the case decided by
the Agra Tribunal supra were that the assessee received salary cheques by way
of credit to his bank account with HSBC Mumbai. The Agra Tribunal took the view
that the assessee had a lawful right to receive the salary as an employee at
the place of employment i.e at the location of its foreign employer and it was
a matter of convenience that the monies were thereafter transferred to India.
As we have already seen that in section 5(2)(a) of
the Act, right to receive salary is not the relevant criterion but the relevant
criterion is the receipt of payment which is admittedly in India. Therefore, we
have our own doubts as to the applicability of the decision of Tapas Kr.
Bandopadhyay AY 2010-11 High Court in the case of A. P. Kalyankrishnan (supra)
to the facts of the present case.
10.5. Now what we are left with is the
decision relied upon by the Learned DR on the Third Member decision of Mumbai
Tribunal in the case of Captain A. L. Fernandez Vs. ITO reported in 81 ITD 203
(TM ) wherein it was held as below:-
8. In my opinion, the salary is includible in the
assessment under s. 5(2)(a) of
the Act, which says that any income received by a non-resident in India is
taxable in India. There is a clear finding in the order of the learned AM, that
there is no dispute that the salary was received in India. This should put an
end to the controversy. I may add, that the Ld. AM has not disputed the
correctness of the Ld. JM's finding that under International law, the floating
island theory has undergone a change and it is no longer correct to regard the
Indian ships as floating islands. Therefore, the position accepted by the
learned members is that the services were rendered outside India, the ships not
being considered as part of India. However, since the salary was received in
India, it was rightly held taxable in India under section
5(2)(a). I agree with the Ld. AM in this respect.
This decision clearly lays down that
the receipt in India of salary for services rendered on board a ship outside
the territorial waters of any country would be sufficient to give the country
where it is received the right to tax the said income on receipt basis. Such a
provision is found in section 5(2)(a) of
the Act which was applied in the aforesaid decision. It is trite that decision
of a Third Member would be equivalent to a decision of a Special Bench and
thereby would become a binding precedent on the division bench.
10.6. We may also point out that the
Agra Tribunal in the case supra had not considered the decision of the Third
Member of Mumbai Tribunal supra. We therefore prefer to follow the decision of
the Third Member case in the facts and circumstances of the present case.
Tapas Kr. Bandopadhyay AY 2010-11 10.7.
To sum up, the facts of the instant case directly fits into the facts of the
Third Member decision relied upon by the Learned DR supra and respectfully
following the same , we hold that the salary received in India is taxable in
India in terms of section 5(2)(a) of
the Act and accordingly dismiss the grounds raised by the assessee .
11. In the result, appeal of assessee
is dismissed.
12. Order is pronounced in the open court on
01.06.2016
Sd/-
Sd/-
(N. V. Vasudevan) (M.
Balaganesh)
Judicial Member
Accountant Member
Dated : 1st
June, 2016
Jd.(Sr.P.S.)
Copy
of the order forwarded to:
1. APPELLANT - Shri Tapas Kr.
Bandopadhyay, 502/13/1, Basudevpur Road, Bakultala, Kolkata-700061.
2 Respondent -DDIT (International
taxation)-3(1), Kolkata.
3.
The CIT(A), Kolkata
4.
CIT , Kolkata
5.
DR, Kolkata Benches, Kolkata
/True Copy, By order,
Asstt. Registrar.
for clarification, call us on +91 98307 56567
So will Seafarer have to pay Tax in India?
ReplyDeleteWhat is the implications for Indian Seafarers? We donot File Tax Returns and we are not required to pay Income Tax as it is all Tax Free income.
ReplyDeleteDo we have to pay tax now...???
ReplyDeleteWhat I can interpret from the above is ''matter of convenience of words how one interpret the words in the rules''. So I hope that shipping ministry and finance ministry will should come out with clear wordings in the rules to avoid any ambiguity. Last year only finance ministry has declared tax free income for Indian Seafarers on Indian flag ships on the request of shipping ministry. So Finance Ministry should amend/add few lines with clear wordings so that the matter can be solved once for all. Otherwise it will be considered that government of India is compelling people to generate black money and in turn lose on forex reserves as was the case in 1991 when the government has gone bankrupt, thanks to Dr. Manmohan Singh of coming with this great idea of exempting foreign currency from tax otherwise by now there would not had been any ITAT remaining in place nor NRE to contest with the absrd wordings of the law.
ReplyDeleteDear Seafarer
ReplyDeleteGreetings of the day.
We have been getting numerous calls inquiring about our blog post on the Mr T K Bandyopadhyay, Income Tax case
(wwwtaxassistindia.blogspot.in/2016/06/landmark-judgement-for-indian.html?m=1)
We would like to bring to your notice the following:
1. This is a issue going on for the past few years and it is not absolutely new. There is no need to panic.
2. This is a case law and NOT law. There are various case laws in favour of Seafarers also (hence a little contradictory).
3. We have posted the Case Law verbatim, so as to avoid confusion. The case number and other details are also mentioned. Moreover, we have verified with the ITD before posting (hence it is genuine).
4. This is posted on the blog as our Web hosting cannot take the data load.
5. We will come up with an article soon, explaining the issue with solutions.
Please feel free to call us for any queries or clarifications and please get your Tax File in order.
Plz don't worry much. Solutions are at hand to a large extent.
God bless.
Team Tax Assist
NRI@TAXASSIST.IN
098307 56567
Apparently thid seems to be a case of misinterpretation of IT Act.
DeleteGovt. Acts/Rules are worded in very complicated manner which gives enough scope of interpretation in diverse ways & leads to people who are ACTUALLY defaulters get away scotfree as his case is presented in a court in the BEST POSSIBLE WAY by the council. Where as the genuine law abiding citizen gets unfavourable decidions as the tthecsse is not well represented or the Act /sub clauses are not interpreted properly leading to the Judiciary giving verdict in favour of the opposite side.
In view of the present case history my question :
If a seaman working in foreign shipping co. draws his salary from the master on board and transfers the amt in foreign currency ti his NRE a/c in India, will he be exmpted from paying tax in India or not? In my opinion as thr money is "received" abroad and if he is man tainting NRI status he need not pay any tax to GOI. In this case all NRI seafarers woking in foreign ships could take token amt from the master as and when
required as ADVANCE & whenever their ships touches a port where there is good facilities for
fund transactions and port stay is suffivient, they could draw their balance of wages & transfer it to NRI a/c India. Please advise.
Best regards,
P. K. Majumder
In the case above mentioned, the only thing the court deems out of favour or is not convinced of the seafarers is the point where he is remitting the salary in India for sake of convenience. Well, as per the terms of employment and CBA , SEAFARERS are entitled to receive their salaries in cash , onboard the vessel, hence it certainly and without doubt is a matter of convenience for the seafarer to remit Or receive his earnings in India via an Indian bank.
ReplyDelete@ NRI Tax Assit:Sir, What is the bottom line? Are we suppose to pay taxes or not? or this is just a case law and we are exempted to pay taxes until this case law becomes a LAW.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteKindly provide some heads up as to what's going on. As few more seafarers have been slapped with income tax notice as per economic times (1-Aug-2016).
ReplyDeleteIn 2014, Tax Appelate Tribunal said ""The Income Tax Appellate Tribunal (ITAT) which adjudicates tax matters, in a recent decision, has held that merely because the salary was credited by the Singapore-based employer company to the employee's NRE bank account in Mumbai, it will not trigger a tax incidence in India. The ITAT sought to distinguish between 'income' received in India and an 'amount' received in India. "" You can read the document here at http://www.itatonline.in:8080/itat/upload/631945098028983132913$5%5E1REFNO319_and_320-2013_Arvind_Singh_Chauhan.pdf ref case of Arvind Singh Chauhan NRE working in Executive Ship mgmnt, Singapore vs ITO, Agra bench case no I.T.A. No.: 319 and 320/Agr/2013 (Image courtsy: TOI)
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteIn 2014, Tax Appelate Tribunal said ""The Income Tax Appellate Tribunal (ITAT) which adjudicates tax matters, in a recent decision, has held that merely because the salary was credited by the Singapore-based employer company to the employee's NRE bank account in Mumbai, it will not trigger a tax incidence in India. The ITAT sought to distinguish between 'income' received in India and an 'amount' received in India. "" You can read the document here at http://www.itatonline.in:8080/itat/upload/631945098028983132913$5%5E1REFNO319_and_320-2013_Arvind_Singh_Chauhan.pdf ref case of Arvind Singh Chauhan NRE working in Executive Ship mgmnt, Singapore vs ITO, Agra bench case no I.T.A. No.: 319 and 320/Agr/2013 (Image courtsy: TOI)
ReplyDeleteSo what's the bottom line.So called nri
ReplyDeleteSeafarers filing returns showing all salary income remitted to nre ac all these years with NIL tax payment(even in some cases got back tds money back).what will happen to them?
Scared to file return
So what's the bottom line.So called nri
ReplyDeleteSeafarers filing returns showing all salary income remitted to nre ac all these years with NIL tax payment(even in some cases got back tds money back).what will happen to them?
Scared to file return
Sec 6 is applicable as long as there is no amendment to the IT act 1961.The law has to change.Judgement can be challenged.
ReplyDeleteSec 6 is applicable as long as there is no amendment to the IT act 1961.The law has to change.Judgement can be challenged.
ReplyDelete