The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the income earned by a Non-Resident Indian outside India is exempted from tax even if the same was paid into the Non-Resident External (NRE) account of the assessee in India.
The appeal was filed by the assessee, Pralay Pradyotkanti Gosh, through his counsel Shri S.N. Soparkar & Shri Parin Shah against the order of the Commissioner of Income Tax, CIT (IT & TP), Ahmedabad, in proceedings under Section 263 for the assessment year 2016-17.
The assessment order was passed under Section 143(3) of the Income Tax Act, 1961 accepting the income declared by the assessee in his return.
The CIT had initiated proceedings under Section 263, the matter of the assessee and the return filed was selected for scrutiny to examine the “claim of large exempt income”.
During the course of assessment, assessee had given categorisation of this exempt income and submitted that the salary is received from his overseas employer “Oceaneering International GmbH”. This was claimed as “exempt” income because of his non-residential status and the salary earned is for working in international waters.
The CIT(A) was of the view that assessing officer (AO) did not conduct cogent enquiries during the course of assessment proceedings and held that the order passed is erroneous and prejudicial to the interests of the revenue and accordingly, the same was set aside for de novo consideration.
Aggrieved by the said order, assessee preferred the present appeal. He submitted that during the course of assessment, AO had gone into substantial depth while inquiring into this issue and it is not a case where there is any lack of enquiry during assessment proceedings.
The bench held that the assessment order is not erroneous and prejudicial to the interests of the Revenue. AO had made detailed enquiries into the claim of the assessee’s income being “exempt” under the Act and the assessee also filed detailed submissions duly supported by various documents. The CIT(A) had erred in holding that AO had not made cogent enquiries during the course of assessment proceedings, the bench observed.
The bench clarified that simply because the overseas employer paid salary into the NRE account of the assessee in India, does not imply that the income is taxable in India.
The two-member bench consisting of Shri Waseem Ahmed (Accountant Member) and Shri Siddhartha Nautiyal (Judicial Member) allowed the appeal, setting aside the order passed by CIT.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
