ITAT asks to reconsider Claim for Tax Relief since Assessee produced Tax Residency Certificate during Appellate Proceedings [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has asked the Assessing Officer to re-consider a claim for tax relief as the assessee, a non-resident has produced Tax Residency Certificate during the first appellate authority.

The assessee, an employee in IBM India Private Limited and during the financial year 2013-14 was sent on short-term foreign assignment to the United Kingdom. During the previous year 2013-14, the assessee stayed in India for 13 days. His residential status for that year under consideration was Non-Resident in India. The assessee filed the return for the said year claiming the deduction of Rs 1,05,542/- under Chapter VIA of the Act and claimed a refund of Rs 45,26,490/- in his return of income.

As per the provisions of Article 16(1) of the India-UK Double Taxation Avoidance Agreement (DTAA), salary earned by a UK tax resident is taxable only in the UK. However, the Assessing Officer denied the relief claimed under India –UK DTAA for not furnishing the tax residency certificate during the course of assessment proceedings.

The Tribunal noticed the fact that the certificate was produced by the assessee before the Commissioner (Appeals).

Allowing the relief to the assessee, the Tribunal observed that “Admittedly, the same was furnished by the assessee before the ld CITA for the first time. The ld CITA without asking for a remand report from the ld AO in this regard proceeded to grant relief to the assessee. We find that the revenue had raised one of the ground on account of violation of provisions of Rule 46A of the Income Tax Rules with regard to the tax residency certificate furnished only before the ld CITA. Hence in the interest of justice and fair play, we deem it fit and appropriate, to remand this issue to the file of ld AO, for the limited purpose of verification of the tax residency certificate furnished before the ld CITA. This was the only basis of denial of the claim of the assessee by the ld AO in the assessment. If on verification of the same, the ld AO is satisfied regarding the claim of the assessee, then the assessee should be granted the relief.”