June 2019

Section 5(2)(a) and section 15 of the Income-tax Act, 1961 – salary remitted to NRE account in India for services rendered in Nigeria is not taxable in India on receipt basis

GEETA JANI | DHISHAT B. MEHTA
Chartered Accountants

11

TS-220-ITAT-2019(Kol)

Deepak Kumar Todi vs. DDIT

ITA No. 1918/Kol/2017

A.Y.: 2011-12

Dated: 16th April, 2019

 

Section 5(2)(a) and section 15 of the Income-tax Act, 1961 – salary remitted to NRE account in India for services rendered in Nigeria is not taxable in India on receipt basis

 

FACTS

The assessee, a non-resident individual, was employed in Nigeria. For the relevant year under consideration, the Assessee received foreign inward remittances in his NRE account maintained in India on account of salary for the services rendered in Nigeria. The assessee contended that such salary amount was transferred by the employer only under due instructions of the assessee. Thus, the constructive receipt of such salary is out of India and the money received in the NRE account of the assessee is mere remittance which cannot constitute income ‘received or deemed to be received in India’ within the meaning of section 5(2)(a) of the Act.

 

The AO, however, was of the view that receipt of salary in India by way of direct remittance by the foreign employer to the assessee’s bank account in India would amount to first receipt in India. Further, as the income has not been taxed in Nigeria, non-taxation of such amount in India would amount to double non-taxation. Consequently, the AO taxed such amount as salary income under the Act.

 

Aggrieved, the assessee appealed before the CIT(A) who upheld the AO’s order. Still aggrieved, the assessee appealed before the tribunal.

 

HELD

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