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NRI’s Income or Deposit in Foreign Bank Account cannot be Taxed in India: ITAT [Read Order]

NRI’s Income or Deposit in Foreign Bank Account cannot be Taxed in India: ITAT [Read Order]
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The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that Non-resident’s income or deposit in foreign bank accounts could not be taxed in India. Ananya Ajay Mittal, assessee is an individual and in the AY 2008-09, he had gone to the USA for his studies. A search and seizure action were carried out in the case of the assessee's father, Shri Ajay Mittal and during the course...


The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that Non-resident’s income or deposit in foreign bank accounts could not be taxed in India.

Ananya Ajay Mittal, assessee is an individual and in the AY 2008-09, he had gone to the USA for his studies. A search and seizure action were carried out in the case of the assessee's father, Shri Ajay Mittal and during the course of search action, certain documents were found which contained details of foreign bank account of the assessee, USA. It was also seen that the foreign bank account was not declared in the income tax return filed by the assessee for the said assessment year and the AO taxed the entire credit noticing that in the original return he had mentioned the status of resident, and only in the revised return filed after search and seizure he used the status of non-resident. 

Piyush Chhajed,on behalf of the assessee submitted that, by mistake in the original return of income, the assessee might have given his status as resident. He further submitted that in the notice u/s 153 A Of the Income Tax Act 1961, the assessee had filed the return of income showing that the status as non-resident and even in the assessment order was passed in the status of non-resident and once that was to so, then no income of the assessee of a foreign bank account could be taxed here in India. He further submitted that Clause-(c) is to be read with Clause-(b) of Explanation 1 to section 6 as the assessee was staying outside India since 1st April 2008 and was non-resident from 2008-09. 

Shailja Rai on behalf of the revenue submitted that, assessee who had been outside India since AY 2008-09 had stayed more than 60 days in this year shall be treated as resident according to Section 6 of Income Tax Act 1961, Moreover, assessee in the original return of income had declared his status as resident and even in the AY 2008-09 also had shown as Resident. He further submitted that the assessee could not say that he was non-resident simply in the return filed notice u/s 153A of the Act.

The Bench of S. Rifaur Rahman (Accountant Member) and Amit Shukla (Judicial Member) allowed the appeal, held that the assessee could not be treated as resident and income or deposit in the foreign bank account of the assessee who is not resident in India could not be taxed in India. The Bench observed that, “merely mentioning the status as resident in the original return of income does not make the assessee as resident in India. Here in this case, assessment has been made u/s 153A and the assessee has declared the status as non-resident in return of income filed in response to the notice u/s 153A and the assessment has been completed in the status of non-resident.”

To Read the full text of the Order CLICK HERE

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