INCOME TAX ACT, 1961

Section 90 Article 15

Double Taxation Avoidance Agreement - DTAA between India and Australia - Salary received by the assessee from Australia entity -

(a) The assessee was an individual, employed in M/s. General Electric International Inc. in India (GEII India). (b) The assessee was seconded by (GEII India) on overseas assignment for the purpose of employment with M/s. General Electric International Inc. in Australia (GEII Australia) during the year under consideration. (c) The assessee stayed in India for 151 days and left India for employment on 30-8-2014. (d) Accordingly, assessee qualified as a Non-Resident of India in accordance of Explantion-1(a) of section 6(1) of the Act. (e) The return of income was filed by the assessee in the capacity of non-resident for the assessment year 2014-15 admitting the salary income received by him only in India for the period 1-4-2014 to 30-8-2014. (f) The salary income received in Australia was claimed as not taxable in India in view of the fact that services were rendered by the assessee in Australia, but monies for the same were paid by (GEII India) in the bank account of the assessee in India. (g) The salaries for the period 31-8-2014 to 31-3-2015 were paid by (GEII India) to the assessee by crediting the bank account of the assessee in India after duly subjecting the same to deduction of tax at source. Hence, the said salary was included in Form No.16 of the assessee. (h) The salary paid to the assessee from 31-8-2014 to 31-3-2015 was later reimbursed to (GEII India) by GEII Australia on ground that the said salary cost to employee should be absorbed as expenditure only in the books of GEII Australia. Services were rendered by the assessee in Australia during the relevant period. The assessee had become a resident of Australia as per the Australian Tax Laws and had duly filed his tax returns for Australia Calendar Year offering the salary received. Since the salary for the relevant period was received by the assessee in India, the lower authorities had brought to tax the said salary in terms of section 5(2)(a) of the Act. Held: From the combined reading of Article-1 and Article-15 of India- Australia Treaty, it could be safely concluded that the Treaty benefit shall be applicable to persons, who are residents of both India as well as Australia. Hence, the contention of the revenue that the assessee being a non-resident and hence treaty benefit cannot be extended to the assessee, was incorrect. As per Article-15 of India-Australia Treaty, it had been categorically mentioned that salary income shall be taxable only in Australia, in case of an individual, who is a resident of Australia. In the instant case as narrated above, there was absolutely no dispute that assessee herein was a resident of Australia and non-resident of India during the year under consideration. Hence, assessee would be entitled to India-Australia Treaty wherein as per Article-15, salary income of resident of Australia is taxable only in Australia.

Distinguished on facts :Swaminathan Ravichandran v. ITO International Taxation in ITA No. 2991/Mds/2016 dt. 5-8-2016.Relied on :DIT (International Taxation) v. Prahlad Vijendra Rao (2011) 198 Taxman 551 (Karn) : 2011 TaxPub(DT) 0609 (Karn-HC), CIT v. Avtar Singh Wadhwan (2001) 247 ITR 260 (Bom) : 2001 TaxPub(DT) 0816 (Bom-HC) and Sumanabandyopadhyay & Anr. v. Deputy Director of Income Tax (International Taxation) in TS-281-HC-2017 (Cal) : 2017 TaxPub(DT) 1909 (Cal-HC)

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