TMI Blog2024 (3) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal return and large refund has been claimed (Non-business ITR) 5. Substantial difference in total taxable income shown in Annexure II of TDS, return of employer in Form 24Q and that shown in ITR 3.1 On being asked to explain in this respect, the assessee explained that the assessee was employed with PricewaterhouseCoopers Private Limited ( PWC ), India. During the previous year relevant to assessment year under consideration, the assessee was on an international assignment to USA. During the year, the assessee stayed and exercised his employment in USA and had been in India for 16 days only. Though the salary was received in India in his bank account, however, the same was paid to the assessee for exercising his employment in USA and was also taxed in USA. Therefore, the assessee had not shown salary income in his Income Tax Return filed in India. The aforesaid mismatch of salary income shown in ITR as compared to Form 26AS/TDS return of the employer was due to aforesaid reasons. It was submitted that since, the salary was taxed in USA, therefore, taxing the salary in India would amount to double taxation of the same income. The Assessing Officer, however, requisitioned tax reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer. 4.2 In the remand report, the Assessing Officer reported that though the assessee has claimed that he had stayed in India only for 16 days, however, the assessee had not submitted the documents in support of the stay in India for last four years, due to which, residential status of the assessee in India could not be established as per the provisions of section 6(1)(c) of the Income Tax Act. He, therefore, reported that in the absence of documents clarifying the stay of the assessee in India in last four years, the correct residential status of the assessee cannot be determined as per the provisions of section 6 of the Income Tax Act. He further reported that if the assessee is found to be US resident as well as simultaneously the resident of India, then for the purpose of Indo-US DTAA, his residential status would be determined by para 2 of Article 4 of Indo-US DTAA. He further reported that since the documents submitted by the assessee were not sufficient enough to determine the residential status of the assessee as per section 6 of the Income Tax Act, and as per para 2 of Article 4 of Indo-US DTAA, hence, the benefit of Article 16 of the DTAA cannot be given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the evidences produced by the assessee, it was undisputed that because of assessee s limited stay in India, the assessee qualified for the status of a non-resident. He, however, observed that since the assessee had earned salary income from PWC, India and further the PWC, India had claimed deduction of expenditure in respect of remuneration paid to the assessee while computing profit chargeable to tax in India. That the income of the assessee, thus, was chargeable to tax in India. That the payments that were made to the assessee by his employer for his upkeeping in US, were also controlled by his Indian employer and were not separable from his employment in India. Even if certain payments that were paid to him outside India had their nucleus of employment of the assessee in India. He further observed from the employment contract of the assessee with PWC-India that during the foreign assignment of the assessee, his funding company was PWC-India, that even the profit and gains from the project would be those of PWC-India. He observed from the employment contract that the assessee s entire control was at all times with his Indian Employer, with salary/other emoluments also been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of checking the non-resident status of the assessee. If any of the conditions as mentioned in clause (a) or clause (c) to section 16(1) is attracted then the assessee would be treated as a resident of India. The ld. Counsel for the assessee has not made any submissions relating to the status of the assessee of cumulative stay of less than 365 days in four years preceding the year in question. Therefore, the assessee by virtue of provisions of section 6(1) of the Act has failed to establish his status of non-resident. 6.3 Now, at this stage, it would be relevant to refer to the following provisions of section 90 of the Income Tax Act: DOUBLE TAXATION RELIEF [Agreement with foreign countries or specified territories. 90. (1) The Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India, (a) for the granting of relief in respect of (i) income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be, or (ii) income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zenship, place of management, place of incorporation, or any other criterion of a similar nature, provided, however, that (a) 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; and (b) in the case of income derived or paid by a partnership, estate, or trust, this term applies only to the extent that the income derived by such partnership, estate, or trust is subject to tax in that State as the income of a resident, either in its hands or in the hands of its partners or beneficiaries. (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 does not have a permanent home available to him in either State, he shall be deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for the year 2018 and for the year 2019 in US. Therefore, the assessee is a tax resident of both the States. Now, to see that the assessee is a resident of which State, the permanent home status of the assessee is to be seen. The assessee has not furnished any specific evidence in this respect. However, a perusal of the Income Tax Returns of the assessee filed in US would reveal that for the year 2018, the assessee has mentioned his address in the Income Tax Return as under: Somnath Duttagupta, 10 General Warren Blvd, Residence Inn, Room 138, Philad Malvern, PA 19355-1226 When we fill this address in Internet Google Search Engine, this is found to be the address of a hotel namely Residence Inn Philadelphia Great Valley, 10, General Warren Boulevard Malvern, PA 19355. The assessee was residing in room no.138 in the said hotel as mentioned in his return of income for the year 2018. Further, in the Income Tax Return filed by the assessee in US for the year 2019, the address of the assessee has been mentioned as Somnath Dutta Gupta, B 235, Lake Gardens, Kolkata 700045, India. Further, in the assessment order passed by ACIT, Circle-2(1), Kolkata, the address of the assessee has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operating in international traffic by an enterprise of a Contracting State may be taxed in that State. 6.9 A perusal of the above Article 16 would reveal that at the first instance, the salaries and wages and other similar remuneration derived by a resident of a contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in other contracting State. If the employment is so exercised in other State then the remuneration will be taxed in that other State. As discussed above, the assessee, under the circumstances, though for the year under consideration has stayed only for 16 days in India but in view of the provisions of section 6 of the Income Tax Act read with Article 4 of the Indo-US DTAA, in our view, the assessee is to be treated as a resident of India for the year under consideration. As per paragraph 1 of Article 16 of the Indo-US DTAA, since the assessee has exercised his employment in US i.e. The Other Contracting State , therefore, at the first instance, the assessee s remunerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not hit by clause (a) as the assessee has stayed more than 183 days in US. However, as per clause (b) and (c), the salary income of the assessee will be liable to be taxed in India as the remuneration was paid or on behalf of an employer who was not a resident of the other State i.e. US. 6.12 Now, the moot point before us is as to whether the Clause (a), (b) (c) to Article 16(2) of the Indo-US DTAA are to be read together and that all of the three clauses have to be simultaneously applied to see as to 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. A perusal of the provisions of Article 16(2) reveals that Clause (a), (b) (c) have been written together in conjunction to each other. These clauses are not separated with the word or , hence there is no impression given that they can be applied severally, independent of each other or to say either of these clauses can be applied. Even, Clause (b) (c) have been conjuncted with the word and . Though, the word and has not been mentioned between Clause (a) and (b), however, that does not make a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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