Salary received by NRI in India by offering Employment in Singapore shall not be Taxed in India: ITAT

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that the salary received by a Non-Resident of India (NRI) in India by offering employment in Singapore shall not be taxed in India. The assessee was a salaried employee with M/s. Master Card India Service Pvt Limited and was sent to Singapore on a long-term international assignment.

During this period, the salary was paid by the Indian employer and he remained on the payroll of the Indian Employer. The assessee received a gross salary of Rs.445.88 Lacs which was not offered to tax in India on the ground that no part of the services was rendered in India and the salary so received by him was already offered to tax in Singapore.

The Assessing Officer (AO), upon combined reading of Article 15 and Article 25, held that Double Taxation Avoidance Agreements (DTAA) relief was to be given by the resident country. In the instant case, the assessee was a resident of Singapore, and being nonresident in India, the assessee was not eligible for relief under Article 15 of the treaty. Accordingly, the salary so received by the assessee was brought to tax.

The Two-member bench comprising of V. Durga Rao (Judicial member) and Manoj Kumar Aggarwal (Accountant member) held that the assessee would be entitled to the benefit of Article 15 of the relevant DTAA which provides that the salary would be taxable in the country wherein the employment is exercised. The same would be subject to verification by AO that this income has already been offered to tax in Singapore and the assessee has paid due taxes thereon. The AO would also verify that no credit of Taxes paid in India has been taken by the assessee in Singapore. Thus, the appeal of the assessee was allowed.

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