TMI Blog2023 (8) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, shifting of family by the assessee to Indonesia, children getting education at Indonesia, submitting income earned from foreign assignment for taxable purposes in Indonesia and having economic communication on the basis of holding a bank account and insurance in Indonesia are sufficient to show that the habitual abode of the assessee is at Indonesia. The period is irrelevant and what is relevant was the income earned on the job assigned at Indonesia cannot be considered to be global income of the assessee to be taxable in India. Thus the concept of permanent home available has been wrongly interpreted by the Ld. Tax Authorities. Ld CIT(A) has further fallen in error to not consider the applicability of other parameters of Article 4 (2)(b), which Ld. AO had infect taken note of and determined against the assessee. The findings of the Tax Authorities below in regard to taxing the income of assessee earned from foreign assignment are liable to be reversed. Decided in favour of assessee. - ITA No. 3786/Del/2019 - - - Dated:- 7-3-2023 - SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER For the Appellant : Ms. Priti Goel, AR For the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant was tie breaking to Indonesia for the Year 2016 (relevant to the period 1 January 2016 to 31 March 2016) as per the Treaty, the salary for the overseas assignment duration for the period January 2016 to 31 March 2016 was not to considered by the assessee as taxable in India. Hence, in the India tax return filed by the Appellant for AY 2016-17 on 22 July 2016, he had availed the benefit of the Article 15(1) of the Treaty and claimed a refund of INR 24,92,190/ and received the refund on 14 November 2016. The Appellant's return of income was selected for scrutiny and the assessment was completed under Section 143(3) vide order dated 16 November 2018 issued by the Income Tax Officer. The assessment was completed and order was passed assessing the income at INR 1,18,32,680/- making an addition of INR 66,82,358 (salary income earned in Indonesia for the period January 2016 to March 2016) and accordingly, demand of INR 28,79 430/- was raised. 3. Aggrieved by the said assessment order dated 16 November 2018, the Appellant proceeded with an appeal before the Learned Commissioner of Income Tax, Appeals. The Appellant's appeal was disallowed by the Learned Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 4 of relevant DTAA; ARTICLE 4 RESIDENT 1. For the purposes of this Agreement, the term resident of a Contracting State means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State. 2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows : (a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode ; (c) if he has an habitual a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 which accrued in Indonesia, share be taxed in India. 4. Since you have also filed return with Indonesian tax authorities for the period from 1st January 2016 to 31st March 2016, the tax paid on income accrued during this period, you shall be given credit for according to the provisions of DTAA. 5. Hence, Rs. 66,82,358/- shall be added to your returned income for A.Y. 2016-17 and a credit for the tax paid on this income shall be given in calculation of income tax. Please show cause. 9. Further, it can be appreciated from the findings of the ld CIT(A) in para 6.2 that he has also considered the fact that the assessee is owing a house in India and considered it to be conclusive to determine the residential status and taxed the global income. The ld CIT(A) further observes that the fact of the case have not been examined on the other criteria of personal and economic relations, habitual abode, as the appellant has been found resident of India on the basis of permanent home . 10. Thus the point for determination is whether for the purpose of determining the residential status as per Article 4 of the relevant DTAA, the permanent home available is mere availabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention to appropriate to oneself the exclusive use and enjoyment of the house. It is a conscious intention of the owner in possession to exclude others from interfering with his title and right of possession. 14. It can be observed that Article 4(2)(a) refers to the fact that while attributing the tax residency of resident to one of the contracting States, it is to be seen if he has a permanent home available to him, then he shall be deemed to be resident of that contracting State only where he has a permanent home available to him and the other factors become irrelevant. The ld CIT(A) has proceeded on this premises alone that as assessee owns a residential home in India he is to be considered tax resident of India. But admittedly assessee is not a person having permanent home available to him in Indonesia as he has occupied a leased premises provided by local employer there. House located in India is under lease and rent received is submitted as rental income. Therefore, as per Article 4(2)(a) the assessee has to be assumed to be a person who does not have a permanent home available to him. 15. So, the concept of the centre of vital interest refered in Article 4 (2) (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income while serving in Singapore itself. 7.7 It is a fact that in the Tie-Breaker Questionnaire, the Appellant specifically mentioned to have apartment on rent in Singapore as well and his wife and two daughters were also living along with him in the country of assignment, i.e., Singapore. The Appellant also held Driving License in both the countries and both the countries have been shown as country of residence on various official Forms and documents for the period from December, 2015 to June, 2016, further paid taxes in Singapore while working there from. Further mentioned that all income which will be paid in future (i.e., bonus for period Jan. 2016 to June 2016) for the work period in Singapore, will be taxable in Singapore. 7.8 In our considered view, no doubt the tie-breaker questionnaire having importance in determining the residency of a person, but cannot be exclusively taken into consideration as a base for deciding the residency. The permanence of home can be determined on qualitative and quantitative basis. It is not in controversy that the Appellant for the period under consideration has shown the income earned in Singapore and paid the taxes in Singapore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per Article 4(2)(b), habitual abode is also available for consideration in deciding the residency of a person. Habitual abode does not mean the place of permanent residence, but in fact it means the place where one normally resides. During the period under consideration, the Appellant resided in Singapore and had habitual abode therein only. Therefore, on this reason as well, the Appellant could be treated as resident of Singapore. Section 90(2) of the Act says clearly where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the Appellant to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to the Appellant. Further, sub- section (4) of section 90 of the Act prescribes, an Appellant, not being a resident, to whom an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless a certificate of his being a resident in any country outside I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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