Taxpayer Possessing Tax Residency Certificate & Offering Taxes On Income In Other Contracting State, Deserves Treaty Benefit U/s 90: Kolkata ITAT

Finding that the Appellant/ Assessee has valid Tax Residency Certificate (TRC) for United Kingdom, the Kolkata ITAT reiterated that the salary income received by assessee for his work during stay at United Kingdom is exempt from tax on account of treaty benefit. The Bench of Dr. Manish Borad (Accountant Member) and Anikesh Banerjee (Judicial Member) observed that “the assessee possesses tax residency certificate of United Kingdom for a period from 06.04.2013 to 05.04.2014 and the instant year under the appeal pertains to FY 2013-14 and therefore since the assessee has offered to tax for the year in United Kingdom, assessee deserves DTAA benefit u/s 90 of the Act”. (Para 3) As per the brief facts of the case, the assessee, a non-resident Indian, had received salary from IBM India Pvt Ltd. while working in United Kingdom. He however declared Nil income. The AO noticed that the assessee received salary of Rs. 50,53,721/- from IBM India Pvt Ltd. as he was sent to United Kingdom for short term foreign assignment. Although the salary income of Rs. 50,53,221/- and interest income of Rs. 22,576/- was not offered to tax in India on the ground that the assessee is a non-resident Indian and he was taxed on his total income in the country of residence, the AO denied the claim because the assessee failed to furnish a tax residency certificate from United Kingdom which is required in order to claim DTAA benefit u/s 90 of the Act. The Bench found that in the remand report dated Aug 17, 2022, the AO accepted that copy of tax residency certificate has been received on Aug 31, 2017 and the same was issued by HM Revenue and Customs, UK in which it was declared that the assessee was a resident of the UK during the period from Apr 06, 2013 to Apr 05, 2014. The Bench found that the AO has also stated in the remand report that claim of DTAA benefit of the assessee is valid and therefore the salary income received for the work during stay at United Kingdom is exempt. The ITAT therefore allowed assessee's appeal and deleted the addition made by AO on account of income earned in U.K. Counsel for Appellant/ Assessee: Nageswar Rao Counsel for Respondent/ Revenue: Kiran Chatrapoty Case Title: Debarghya Chattopadhaya verses DCIT Case Number: I.T.A. No. 24/Kol/2023 Click here to read/ download the Order

Taxpayer Possessing Tax Residency Certificate & Offering Taxes On Income In Other Contracting State, Deserves Treaty Benefit U/s 90: Kolkata ITAT

Pankaj Bajpai

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