Interest Income earned by a NRI from a Foreign Bank shall not be Taxable in India u/s 5(2) of Income Tax Act: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the interest income earned by a Non-resident of India from a foreign bank shall not be taxable in India under Section 5(2) of the Income Tax Act, 1961.

As per provision of Section 5(2) of the Income Tax Act which charges a section for non-residents, the Indian income of a non-resident is taxable under the provisions of the Income Tax Act, and any other income earned outside India is not taxable in India.

The Two-member bench comprising of Chandra Mohan Garg (Judicial member) and B.R.R. Kumar (Accountant member) held that the interest income earned by the non-resident assessee from Standard Chartered Bank, New Jersey Foreign Branch is not taxable in India as the same has been accrued to the non-resident assessee from the deposits in the bank situated outside India.

Thus, the same interest income cannot be deemed as received or deemed to be received in India or accrue or arises or deemed to accrue or arise in India, and thus the Commissioner of Income Tax (Appeal) [CIT(A)] was correct and justified in holding that the same was not liable to tax in India in the hands of non-resident Indian assessee. Accordingly, no interference is called for in the conclusion drawn by the CIT(A) on merits and thus ground of Revenue was dismissed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates