May 2019

Articles 4, 16 of India-USA DTAA; section 6 of the Act in case of dual residency, residential status shall be determined by applying tie-breaker test under the DTAA

Geeta Jani | Dhishat B. Mehta
Chartered Accountants

5. (2019) 104 taxmann.com 183 (Bangalore Trib) DCIT vs. Shri Kumar Sanjeev Ranjan ITA No.: 1665 (Bang.) of 2017 A.Y.: 2013-14 Dated: 15th March, 2019

 

Articles 4, 16 of India-USA DTAA; section 6 of the Act in case of dual residency, residential status shall be determined by applying tie-breaker test under the DTAA

 

FACTS

The assessee, a US citizen,  was working in the USA since 1986. His spouse and two children were all US citizens. The assessee was deputed to India by his employer from June, 2006 to August, 2012. Upon completion of his assignment in India, the assessee left India on 10.08.2012 and resumed his employment in the USA. Since then he was residing with his family in the USA.

 

Prior to 1986, the assessee had lived in India for 21 years. He relocated to the USA in 1986 and became a permanent resident in 1992. After marriage, his spouse was also residing in the USA. Their two children were born there. When he was on assignment to India, the assessee was taking his vacations in the USA.

 

The assessee had a house in India as well as in the USA. He had let out his house in the USA while he was on assignment to India.

 

On the basis of his physical presence in India, the assessee was a tax resident of India for FY 2012-13. The assessee also qualified as a tax resident of the USA for FY 2012-13. During the period 11.08.2012 to 31.03.2013 the assessee earned a salary in the USA. According to the AO, since the assessee was a tax resident in India during the relevant AY, his entire global income, including salary earned in the USA, was liable to tax in India. Hence, the AO sought to tax his salary in the USA for the period 11.08.2012 to 31.03 2013.

 

The assessee contended before the AO that he should be considered a tax resident of the USA under the tie-breaker rule of the India-USA DTAA on the basis

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