Salary Earned on Deputation Abroad not Taxable even if credited to Bank Account in India: ITAT [Read Order]

The Delhi bench of Income Tax Appellate Tribunal (ITAT) has held that income earned from abroad is not taxable in India even if the assessee received salary through bank account in India.

The assessee is being an individual who was employed in a company at Mumbai and he was deputed to Iraq. During the time of deputation he earned a salary of Rs  40,04,830/ from Iraq. The assessee has been claimed exemption from tax for the said amount because he was stayed in Iraq more than 182 days. In this view he is a non-resident of India therefor he does not need to pay any tax in India. And The return of income in India was filed at an income of Rs.98,520/- after claiming exemption of aforesaid amount of salary income.

But the CIT has noticed that the assessee has reduced his salary income earned on deputation from abroad by mistake. And he argued that according to the provisions of section 5(2) which provides that total income of non-resident includes all income received or accrued from whatever source derived in India is taxable in India.

The bench comprising of AMIT SHUKLA ( Judicial Member) and WASEEM AHMED (Accountant Member) has observed that “if any person who has been stayed outside India for more than 182 days then the person become a non-resident of India. In this case the assessee has submitted the relevant documents which proved that he has been stayed in Iraq more than 182 days hence now he is considered to be a non-resident Indian. The aforesaid provision of the section is not applicable in this case, because the assessee does not earned any income from India and the total income received by him for the services rendered out of India. No such income has been received by the assessee for carrying out any activity in India. And it should be treated as income earned from abroad hence it is not taxable in India”.

While allowing the appeal of the assessee the bench has declared that income earned from abroad by a non-resident Indian would not be taxable in India even though the assessee had bank account in India.