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TMI Blog2024 (3) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is liable to be taxed in United States as the remuneration was paid by the resident of the United States and therefore, Clause (b) (c) are not attracted in the case of the assessee. As per Article 16(1) of the Indo-US DTAA, such salary income of other similar remuneration, drived by a resident of a contracting state (in our case in India ) in respect of an employment exercised in the other State (in our case USA ) is taxable in that other state (USA). As per Article 16(2), notwithstanding the provisions of Article 16(1), if the conditions stipulated in Article 16(2) are attracted then the said salary or similar remuneration will be taxable in the contracting state of which the resident/assessee is a resident of. Whether the Clause (a), (b) (c) to Article 16(2) of the Indo-US DTAA are to be read together and that 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 and received the remuneration? - A perusal of the provisions of Article 16(2) reveals that Clause (a), ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DTAA are not attracted in the case of the assessee, therefore, it is held that the income of the assessee is taxable in USA and not in India. In the case in hand, this claim of the assessee has not been rebutted or denied by any of the lower authorities. Both the lower authorities have simply relied upon the provisions of section 5 and section 90 to state that since the assessee was a resident and ordinarily resident in India during the year, therefore, the provisions of DTAA would not apply in the case of the assessee. However, a perusal of section 90 read with Article 16 of the DTAA would show that section 90 did not bar in any manner the operation of the relevant provision of DTAA in respect of income earned by the assessee in other country, with whom the Central Government has entered into a DTAA. In view of this, the impugned order of the CIT(A) on this issue is not sustainable and the same is accordingly set aside. The additions made by the AO on this issue are accordingly ordered to be deleted. - Shri Sanjay Garg, Judicial Member And Shri Rajesh Kumar, Accountant Member For the Appellant : Shri Siddharth Agarwal, Advocate. For the Respondent : Shri Ankur Goyal, JCIT- S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. In the course of assessment proceedings, the Assessing Officer noticed that apart from the aforesaid income, the assessee had received salary income of Rs.42,58,111/- from Stanadyne LLC, USA and claimed it exemption under Article 16(1) of the Double Taxation Avoidance Agreement (DTAA) between India and USA. The Assessing Officer observed that since the assessee had conceded that he was physically present in India for more than 182 days (i.e. 200 days) during the financial year 2015-16 and for more than 729 days (i.e 1044 days) in the seven tax years (2008-09 to 2014-15) immediately preceding the financial year 2015-16, hence, the assessee qualified as resident and ordinarily resident of India during the tax year in question. The Assessing Officer thereafter relied the provisions of section 5 of the Income Tax Act, relevant part of which is reproduced as under: Scope of total income. 5. (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the above order of the ld. CIT(A), the assessee has come in appeal before us. 4.2 We have heard the contentions of the ld. representatives of both the parties and also gone through the records. Before proceeding further, it will be relevant to reproduce the relevant provisions of section 90 of the 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 incometax 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 be, to promote mutual economic relations, trade and investment, or (b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, or (c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 22 (Payments received by Professors, Teachers and Research Scholars), salaries, 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 the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State, if : (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year ; (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State ; and (c) the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operating in inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. In the case in hand, though provisions of Clause (a) are attracted, however, the provisions of Clause (b) (c) are not applicable to the case of the assessee. When we read Article 16 of the DTAA as a whole, the reasonable interpretation which would come that the salary and other similar remuneration drived 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 claus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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