Mr. Albert, a non-resident and American citizen, is employed in an American company. The American company has a PE in India. Albert visited India…

CA Final · Direct Tax Laws and International Taxation · MTP · May 2024
Mr. Albert, a non-resident and American citizen, is employed in an American company. The American company has a PE in India. Albert visited India during the F.Y. 2023-24 on official work and stayed for 80 days. His salary for that period was - 25,00,000 which is borne by the Indian PE. Albert held 1200 shares of Shine Pvt. Ltd. (SPL), an Indian company since 31.12.2018 which he acquired for 35 per share. For acquiring the shares, he remitted USD 50,000 to India on 15.12.2018. He sold these shares on 20.8.2023 for 63 per share. Albert also held 2000 equity shares of YoC Inc., another American company, which he had acquired for dollars equivalent to 145 per share in 2018. YoC Inc. follows April to March as its financial year. He sold all these shares for dollars equivalent to 615 per share to Mishel, another non-resident, on 10.10.2023. The relevant information of YoC Inc. as on 31.3.2024 is given below: (i) Total value of assets 15 crores. (ii) Total value of immovable properties worldwide= 12 crores. (iii) Immovable properties held in India (included in (ii) above) -8 crores. Dividend from YoC Inc. received in India on 28.06.2023 was - 1,32,000. You are required to compute the total income taxable in India of Mr. Albert ignoring the provisions of DTAA between India and USA. Exchange rates for 1 USD on the relevant dates is given as hereunder: Date Buying Rate (1 US $) Selling Rate (1 US$) 31.12.2018 68 70 15.12.2018 66 68 20.8.2023 90 92

Suggested Answer and Working Notes:

Computation of Total income of Mr. Albert for the A.Y. 2024-25 Particulars Particulars ₹ Salary 25,00,000 [Salary deemed to accrue or arise in India, since it is paid for services rendered in India as per section 9(1)(ii). Hence, it is taxable in the hands of Mr. Albert. Exemption u/s 10(6)(vi) would not be available to him, though he stayed in India for a period of not exceeding 90 days during the previous year since he is receiving salary from an American company which is engaged in business and trade in India through a PE in India and such salary is borne by Indian PE] Less: Standard deduction u/s 16(ia) 50,000 24,50,000 Capital Gains Transfer of 1200 equity shares of Shine Pvt. Ltd. [Taxable in India, since shares are situated in India] Sale Consideration (1200 x 63 per share/91, being average of 90 (TTBR) +92 (TTSR)/2 on 20.8.2023) $ 830.77 Less: Cost of acquisition (1200 x 35 per share/69, being average of 68 (TTBR) +70 (TTSR)/2 on 31.12.2018) $ 608.70 $ 222.07 Long-term capital gain [$ 222.07 x 90, being TTBR on 20.08.2023] 19,986 Transfer of 2000 Equity shares of YoC Inc. [Not taxable in India, since shares of foreign company do not derive its value substantially from assets located in India as value of Indian assets do not exceed 10crores] Nil Income from Other Sources Dividend received in India from YoC Inc. [taxable in India, since dividend is received in India] 1,32,000 Gross Total Income/total income 26,01,986 Total income (rounded off) 26,01,990

Topics: Non-Resident Taxation

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