The tax exemption cannot be forbidden within the framework of the agreement to avoid double taxation between India and Austria only for lack of tax residence: ITAT Hyderabad.

In the most recent case of ITAT, the tribunal ruled that the exemption under the Double Taxation Agreement (DTAA) between India and Austria cannot be forbidden due to the lack of a tax residence certificate. As of the facts, the petitioner is a non-resident who submitted his income returns for the 2014-15 valuation year where he allowed a total income of Rs. 10,04,580 / -. The petitioner had to provide certain information during the procedure under Section 143 (2) of the Act. Upon further examination by the evaluator it was found that the gross salary of the petitioner was Rs. 31.11, 185 / – and therefore it was found that the petitioner’s employer had deducted the tax at source from Rs. 7,76,564 / -.

Later, when reviewing the total income submitted by the petitioner, the AO found that the appraiser had applied for double tax relief under Section 90 of the IT Act and approved the total income, but requested a TDS of Rs. 7,66,567 / – on his return. . To that end, the petitioner had to provide the tax residence certificate to claim Section 90 outside India salary for the services provided outside of India and the copy letter between employer and employee.

In response to this request, the petitioner stated that he was qualified as a non-resident under Section 6 (1) of the Act. For the same reason, the expatriate allowance of Rs. 20,72,238 was not offered for taxation in the income statement in India as it was received outside of India for the services provided outside of India and is not part of the total income under Section 5 (2) of the Act .

After examining all the documents submitted, the tribunal instructed the auditor to allow an exemption under the DTAA and found that it was a very hectic task to receive the certificates from abroad for compliance with domestic legal obligations. Under such conditions, the assessee cannot be required to complete impossible tasks and will be punished for doing so. If the taxpayer presents circumstantial evidence in such cases, the requirement of Section 90 (4) is to be relaxed.

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