A foreign national, Mr. A, is a resident in India and has entered into an agreement with his employer wherein he is entitled to a net (in-hand) salary of ₹3 lakhs per month. As per the terms of the agreement, any statutory tax obligations arising over and above this amount are to be borne by the employer. Accordingly, the employer has grossed up Mr. A's income and discharged the applicable tax liabilities under the relevant income tax slabs. Mr. A has been paid net salary only, and the employer has paid the corresponding taxes on his behalf. His total salary income, after grossing up, amounts to ₹10 lakhs (since he joined in January).
In addition to his salary, Mr. A has earned other non-salary income of Rs.20 lacs on which no tax has been deducted at source (TDS). Mr. A contends that since the tax on his salary income has already been borne and paid by the employer, the same salary income should be excluded from the computation of his total tax liability, and only the tax on his other income should be considered.
Is Mr. A’s contention valid? Are there any judicial precedents, CBDT circulars, or relevant case laws clarifying this position?
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