The Delhi bench Income Tax Appellate Tribunal ( ITAT ) held that salary paid by the Indian company to a non-resident for service rendered outside India is not taxable in India.
The Assessee Devi Dayal,was an employee o f M/s Datamatics Global Services Ltd. an Indian company, deputed to work in a project awarded by IAEA , Vienna , Austria and stationed at Vienna and a non-resident.
The salary and the compensatory allowances were paid to the assessee at Vienna from the company in India. The allowances were permissible to be utilized through a credit card which is valid only in Austria.
As per the provision of Section 9 (1)(ii), the income earned under head “Salaries” is taxable in India “if it is earned” in India. The explanation issued for removal of doubts declares that ‘salaries if it is earned’ meets services rendered in India.
Accordingly, in the instant case the assessee neither had any rest period nor leave period which is preceded and succeeded by the services rendered outside India. Since, the assessee has rendered services outside India, the salary cannot be taxable in India
After analyzing the submission of both parties the bench comprising V. Durga Rao (Judicial Member) and Manjunatha, G (Accountant Member) observed that Section 5 dealing with scope of total income, Section 15 dealing with computation of total income under the head salary and chargeability thereof and Section 9 dealing with income arising or accruing in India with reference to the salaries and the services rendered in India.
Therefore, the bench held that no taxability arises on the salary/allowances received by the assessee since the assessee is a non-resident and has rendered services outside India.
Pallavi Talavlikar, the counsel appeared for the assessee and P. Praveen Siddharth, counsel appeared for revenue.
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