Section 5(2)(a) of the Act – Receipt of salary by a non-resident in an Indian NRE Account for services rendered outside India cannot be taxed on a receipt basis

6. [2026] 183 taxmann.com 532 (Ahmedabad - Trib.)

Kaushal Ganpatbhai Patel vs. ITO (International Taxation)

IT APPEAL NO. 434 (AHD) OF 2025

A.Y.: 2019-20 Dated: 09 February 2026

Section 5(2)(a) of the Act – Receipt of salary by a non-resident in an Indian NRE Account for services rendered outside India cannot be taxed on a receipt basis

FACTS

The Assessee, a non-resident, was employed with a company in Seychelles. The salary for the services rendered was credited to his NRE account in India. Since the salary was credited to the NRE account in India, the AO was of the view that the salary was taxable on receipt basis under Section 5(2)(a) of the Act.

The DRP upheld order of the AO.

Aggrieved with the final order, the Assessee appealed to ITAT.

HELD

The Agra ITAT in Arvind Singh Chauhan [2014] 42 taxmann.com 285 (Agra – Trib.) observed that “income received in India” connotes first receipt of income, i.e. when the assessee obtains the money in his ow