Income Tax | Salary Received By Chinese Resident For Services In China Not Taxable In India, Even If Credited To Indian Bank Account: ITAT

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has stated that salary received by Chinese resident for the services in China not taxable in India, even if credited to the Indian bank account. Manu Kumar Giri (Judicial Member) and S.R. Raghunatha (Accountant Member) observed that “the AO has disallowed the exemption claimed with respect to salary received in India for services rendered in China as taxable in India since the salary has been credited by BMW India Pvt Ltd into the assessee's account at Chennai from the payroll account of Chennai……. The salary income for services rendered in China has been rightly offered tax by the assessee in China.” In this case, the assessee, an employee of BMW India Private Limited was on an assignment/secondment to BMW Brilliance Automotive Limited during the FY 2021-22 relevant to the AY 2022-23 and was rendering services/exercising employment with BMW China in China during this period. While on an International assignment with BMW China, the assessee was based in China and was physically present in China and was rendering services in China during the FY 2021-22. The assessee was in India for less than 60 days during the FY 2021-22 and qualified as a Non-Resident in India as per Explanation (b) to Section 6(1) of the Act. The Appellant was present in India for “Nil” days during the FY 2021-22. Since the assessee qualified as a Non-resident of India during FY 2021-22 and a Resident of China for the Calendar year 2021 and exercised his employment/rendered services in China with BMW China, the assessee claimed exemption with respect to salary received in India for services rendered in China, under Article 15(1) of the India- China DTAA r.w.s. 90 of the Income Tax Act. However, the AO has in his Final assessment order and the Dispute Resolution Panel ('DRP') in the directions issued, disallowed the exemption claimed. The assessee submitted that the salary received by the assessee in India is exempt under Section 5(2) read with Section 9(1)(ii) of the Income Tax Act as the same does not accrue or arise to him in India as the services have been rendered outside India. The Section 5(2) of the Act lays down the scope of total income of a NR subject to tax in India. The Tribunal observed that “since the assessee qualified as a Non-resident of India during FY 2021-22 and a Resident of China for the Calendar year 2021 and exercised his employment/rendered services in China with BMW China, the assessee claimed exemption of Rs.1,53,65,359/- with respect to salary received in India for services rendered in China, under Article 15(1) of the India- China DTAA r.w.s. 90 of the Act and accordingly filed his return of income for the A.Y. 2022-23 on 18.07.2022 and claimed a refund of Rs.52,22,590/-.” The bench opined that the salary income for services rendered in China has been rightly offered tax by the assessee in China. In view of the above, the Tribunal allowed the appeal. Case Title: Sivakarthick Raman v. The Assistant Commissioner of Income Tax Case Number: ITA No.:281/Chny/2025 Counsel for Appellant/ Assessee: Preeti Goel Counsel for Respondent/ Department: Anitha, Addl. C.I.T. Click Here To Read/Download The Order

Income Tax | Salary Received By Chinese Resident For Services In China Not Taxable In India, Even If Credited To Indian Bank Account: ITAT

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