1999 (1) TMI 537 - AAR - Income Tax

Summary

Issues involved: Determination of tax liability for a non-resident individual working in India.

Summary:
The case involved Mr. Stanley Keith Kinnett, a U.S. citizen employed by Whirlpool Corporation (WC) in India. The applicant was in India for 76 days during the financial year 1997-98, thus classified as a non-resident for tax purposes. The key questions raised were whether the applicant is liable to tax in India and if so, the quantum of income liable, and how amenities provided are to be evaluated for tax purposes.

Regarding the tax liability, the ruling referred to Article 16 of the Double Taxation Avoidance Agreement (DTAA) between the U.S.A. and India, which specifies that salaries of a resident in one contracting state are taxable only in that state unless the employment is exercised in the other state. In this case, the applicant fulfilled the conditions of article 16(2) as his remuneration was paid by a foreign employer, WC, and not borne by a permanent establishment in India. Therefore, the ruling concluded that the applicant is not liable to tax in India based on the DTAA provisions and the facts presented.

As a result of the negative answer to the first question, the ruling did not delve into the other questions raised. The ruling favored the applicant based on the specific provisions of the India-US treaty and the applicant's circumstances.