The Income Tax Appellate Tribunal ( ITAT ), Delhi bench held that salary received for services rendered outside india is not taxable in India under Article 15(1)of the India- Korea Double Taxation Avoidance Agreement( DTAA )
The assessee,Amit Laroya filed his return of income for the assessment year 2018-19. The AO on perusal of Form 26AS of the assessee observed that the assessee was in receipt of Rs.5,40,07,330/- under the head income from salary from 3M India Limited, an Indian resident company.
Out of this, the assessee had declared only the sum of Rs.29,86,022/- under the head salary and claimed TDS refund of Rs.1,98,58,099/- which included TDS of Rs.1,89,69,411/- deducted on receipt of Rs.5,40,07,330/
The assessee claimed exemption in terms of Article 15(1) of the Act of India Korea treaty in the sum of Rs.5,11,71,307/- being the salary accrued outside India for services rendered outside India.During the proceedings AO denied it and observed that since remuneration was always paid by the Indian employer and control and management of the assessee was always based in India. Thus, the salary received by the assessee from an Indian employer shall be deemed to accrue or arise in India u/s. 9 (i) (ii) of the Act.
Aggrieved, the assessee filed further appeal before the CIT(A) who dismissed the appeal. Thereafter the assessee filed a second appeal before the tribunal.
During the proceedings Vishal Kalra,Counsel for assesee argued that The assessee was sent on international assignment to 3M Korea from 3M India Limited effective from June, 2016 and since then he was working in Korea.
Since assessee was exercising employment in Korea, the Indian company i.e. 3 M India Limited paid the salary to the assessee and cross charged the same on the Korean Company since the assessee was only sent on deputation on an international assignment to 3M Korea.Thus Salary accrued outside India for services rendered outside India were exempted in terms of Article 15(1) of India, Korea DTAA
Vizay B. Vasanta, Counsel for Revenue argued that since remuneration was always paid by the Indian employer and control and management of the assessee was always based in India.Hence as per section 9 of the Act, all incomes which had come directly or indirectly through any source in India would be taxable in India
The tribunal observed that the Article 15 (1) of India Korea treaty states that employment income earned by an individual is exempt from tax in India if the following conditions are satisfied :- (a) If the individual is resident of Korea; and (b) if the employment is outside India.
After reviewing the facts and records, the two-member bench Of M. Balaganesh ( Accountant member ) and Saktijit Dey, ( Vice President ) held that salary received for services rendered outside india is not taxable in India under Article 15(1)of the India- Korea Double Taxation Avoidance Agreement( DTAA )
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