Article 15(1) of India-Austria DTAA – Sections 6(1), 90(4) of the Act – Notwithstanding section 90(4), submission of TRC is not mandatory to claim DTAA benefit if assessee otherwise provides sufficient circumstantial evidence

5. [2020] TS-15 -ITAT-(Hyd.)

Sreenivasa Reddy
Cheemalamarri vs. ITO

ITA No. 1463/Hyd/2018

A.Y.: 2014-15

Date of order: 5^th
March. 2020

Article 15(1) of
India-Austria DTAA – Sections 6(1), 90(4) of the Act – Notwithstanding section
90(4), submission of TRC is not mandatory to claim DTAA benefit if assessee
otherwise provides sufficient circumstantial evidence

FACTS

The assessee was deputed by
his employer in India to Austria. He was paid certain foreign allowance outside
India on which the employer had deducted tax in India. The assessee contended
that since he was in India for less than 60 days, he was a non-resident (NR).
Further, he was a tax resident of Austria. Hence, in terms of Article 15(1) of
the India-Austria DTAA, the salary earned by a tax resident of Austria was
taxable only in Austria. Accordingly, he filed a NIL return as an NR in India.
The assessee also expressed his inability to furnish the Tax Residency
Certificate (TRC) on the ground that the issuance of a TRC was dependent upon
the Austrian tax authority.

Therefore, relying on section
90(4)¹  of the Act, the A.O.
denied DTAA benefit on the ground that the assessee could not furnish the TRC.
The assessee preferred an appeal before the CIT(A). Agreeing with the view of
the A.O., the CIT(A) dismissed the appeal. The assessee then filed an appeal before
the Tribunal.

HELD

(i) If, in spite of his best possible efforts, the assessee could not
procure the TRC from the country of residence, the situation may be treated as
impossibility of performance². In such circumstances, the assessee
cannot be obligated to do an impossible task and be penalised for the same.

(ii) If the assessee provides sufficient circumstantial³ evidence
for proving residency, the requirement of section 90(4) ought to be relaxed.

(iii) In case of conflict between the DTAA and the Act, DTAA would prevail
over the Act. In terms of the DTAA, the assessee was liable to tax in Austria
for services rendered in Austria. Therefore, notwithstanding the Act requiring
a TRC for proving residency, not providing the same to the tax authorities
cannot be the only reason for denial of DTAA benefit to the assessee.

Note: In the absence of
any such specific mention, it is not clear whether the Tribunal read down
section 90(4) of the Act, impliedly treating it as a case of ‘treaty override’.

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1   Section
90(4) provides that an NR assessee will be entitled to claim relief under DTAA
only if he has obtained a TRC from the government of that country

2      Decision does not mention particulars of
‘best possible efforts’ of assessee or basis on which ITAT considered the
situation to be that of ‘impossibility of performance’. Decision merely
mentions that ‘normally it is a herculean task to obtain certificates from
alien countries for compliance of domestic statutory obligations’