DTAA salary taxation turns on place of service performance, and no referable question arose where work was done in France.

Where the Tribunal found as a fact that employment services were rendered in France, article XIV(1) of the India-France DTAA allowed salary taxation only in the state where the services were performed, and section 90(2) of the Income-tax Act, 1961 gave effect to the more beneficial treaty terms. On that basis, remuneration for services rendered in France could not be taxed in India, and the proposed question did not constitute a referable question of law. The applications for reference were therefore rejected.

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Issues: Whether the proposed question regarding taxability of salary under the India-France Double Taxation Avoidance Agreement was a referable question of law in view of the Tribunal's finding that the services were rendered in France.

Analysis: The Tribunal recorded a clear factual finding that the services were rendered in France and that it was never the Revenue's case that the payments were for services rendered in India. Under article XIV(1) of the India-France DTAA, salaries or similar remuneration for services performed in one contracting state by a resident of the other contracting state may be taxed only in the state where the services are rendered. Section 90(2) of the Income-tax Act, 1961 makes the treaty provisions applicable to the extent they are more beneficial to the assessee. On that footing, remuneration for services rendered in France could not be subjected to tax in India, and the proposed question did not arise as a referable question of law.

Conclusion: The proposed question was not referable and the applications for reference were rejected.

Ratio Decidendi: Where the final factual finding is that employment services were rendered in the foreign contracting state, article XIV of the applicable DTAA, read with section 90(2) of the Income-tax Act, 1961, prevents taxation in India to the extent the treaty is more beneficial to the assessee, and no referable question of law arises on that issue.

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