Receipt basis taxation of non-resident salary in India defeats treaty exemption under the India-Switzerland DTAA.

Salary paid to a non-resident for services rendered in Switzerland was chargeable in India because the income was credited and received in India. On those facts, section 5(2)(a) applied on a receipt basis, and the argument under section 9(1)(ii) did not alter the taxability position. The treaty claim under Article 15(1) of the India-Switzerland DTAA also failed, as read with Article 23(2)(a) it was held inapplicable in the manner contended. The salary was therefore taxable in India, and exemption under the treaty was rejected.

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Issues: Whether salary received in India by a non-resident for services rendered in Switzerland was taxable in India under the Income-tax Act, 1961, and whether exemption under Article 15(1) of the India-Switzerland DTAA was available.

Analysis: The assessee was admittedly a non-resident, but the salary was credited and received in India. On the facts found, the income was chargeable under section 5(2)(a) of the Income-tax Act, 1961 on receipt basis. The contention based on section 9(1)(ii) did not assist the assessee because the decisive factor was receipt in India. The treaty plea also failed because Article 15(1), read with Article 23(2)(a), was held inapplicable to the assessee in the manner claimed, and the earlier co-ordinate bench view relied upon by the revenue was followed.

Conclusion: The salary income was held taxable in India, and the claim for exemption under Article 15(1) of the India-Switzerland DTAA was rejected.

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