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2024 (3) TMI 249 - ITAT KOLKATATaxability of salary income in India for the services rendered in US - remuneration derived by resident of a contracting state in respect of an employment exercised in the other contracting state - period of stay in India - scope of Article 16(2) of the Indo-US DTAA - assessee had not shown salary income in his Income Tax Return filed in India - requisitioned tax resident certificate of USA from the assessee - whether the salary income of a resident is liable to be taxed in the state of which the assessee is the ordinary resident or in the other contracting state where he has exercised his employment? HELD THAT:- Though, the word “and” has not been mentioned between Clause (a) and (b), however, that does not make a difference until and unless Clause (a) is not separated from Clause (b) with the word “or”. Therefore, these clauses have to be read together. Therefore, the reasonable interpretation would be that all of the conditions mentioned in Clause (a), (b) & (c) are to be satisfied simultaneously to attract the provisions of Article 16(2) of the Indo-US DTAA. In the case in hand, though provisions of Clause (a) are not attracted, however, the provisions of Clause (b) & (c) are applicable to the case of the assessee for the purpose of deciding the State of taxation of assessee’s income. When we read Article 16 of the DTAA as a whole, the reasonable interpretation which would come that the salary and other similar remuneration derived by resident of a contracting state in respect of an employment exercised in the other contracting state is liable to be taxed in that other state. However, if such resident has not stayed more than 183 days in that other state and the remuneration has not been paid by resident of that other state and even the remuneration is not borne by a permanent establishment or fixed base or a trade or business which the employer has in that other state, then the remuneration of the resident is liable for taxation in the state of which he is a resident. As observed in this case, the assessee is a resident of India, however, he has exercised employment and received remuneration in United States, therefore, at the first instance, as per the provisions of Article 16(1) of the Indo-US DTAA, such salary/remuneration of the assessee is liable to tax in the United States only. The exception clause as mentioned in Article 16(2) of the DTAA is not applicable in toto to the case of the assessee. The condition mentioned in clause (a) of Article 16(2) is satisfied but the conditions of Clause (b) and (c) to Article 16(2) of the DTAA have not been satisfied in this case. Since, we have held that the conditions mentioned in Clause (a), (b) & (c) to Article 16(2) of the Indo-US DTAA have to be applicable together or to say simultaneously and since all the conditions mentioned in Article 16(2) of the DTAA are not attracted in the case of the assessee, therefore, the provisions of Article 16(1) of DTAA will be applicable and accordingly it is held that the income of the assessee is taxable in USA and not in India. Our above view is fortified by the decision of Rajat Dhara [2024 (3) TMI 197 - ITAT KOLKATA] - Decided in favour of assessee.
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