Treaty residence tie-breaker for dual residents turns on permanent home and centre of vital interests, not domestic residency alone.

A dual-resident taxpayer's treaty residence must be determined under the Article 4(2) tie-breaker by assessing permanent home and centre of vital interests. The Tribunal held that the assessee's personal and economic ties were closer to the USA, so treaty residence in the USA applied for the relevant period and Indian tax residence did not govern that period. It also held that section 6(1)(c) did not independently change the treaty outcome, because the dispute was controlled by the DTAA residence analysis. A Tax Residency Certificate filed at the appellate stage did not vitiate the order, as the conclusion rested on surrounding facts rather than the certificate alone.

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Issues: (i) Whether the CIT(A) erred in considering the Tax Residency Certificate produced at the appellate stage without a remand report under Rule 46A of the Income-tax Rules, 1962. (ii) Whether, on the facts, the assessee was entitled to be treated as a resident of the USA for the relevant period under the tie-breaker rule in Article 4(2) of the treaty, and whether section 6(1)(c) of the Income-tax Act, 1961 had any independent bearing.

Issue (i): Whether the CIT(A) erred in considering the Tax Residency Certificate produced at the appellate stage without a remand report under Rule 46A of the Income-tax Rules, 1962.

Analysis: The Tax Residency Certificate was filed before the appellate authority, but the finding of treaty residence was not founded on that certificate alone. The decisive basis was the factual assessment of the assessee's permanent home and centre of vital interests under Article 4(2). Since the conclusion rested on the surrounding facts and not on the TRC as the sole foundation, the appellate order was not vitiated on this ground.

Conclusion: The ground failed and was against the Revenue.

Issue (ii): Whether, on the facts, the assessee was entitled to be treated as a resident of the USA for the relevant period under the tie-breaker rule in Article 4(2) of the treaty, and whether section 6(1)(c) of the Income-tax Act, 1961 had any independent bearing.

Analysis: The assessee had residential links with both countries, so the treaty tie-breaker had to be applied. On the material placed, the assessee's personal and economic relations were held to be closer to the USA for the relevant period, and the centre of vital interests was found there. The statutory residency provision under section 6(1)(c) did not alter the result because the controversy turned on treaty residence under Article 4 of the DTAA. The claim that split residency was unavailable did not assist the Revenue in the face of the treaty analysis.

Conclusion: The assessee was entitled to treaty residence in the USA for the relevant period and the income was not taxable in India for that period.

Final Conclusion: The Revenue's challenge to the appellate relief failed, and the addition made on the basis of Indian tax residence for the disputed period could not be sustained.

Ratio Decidendi: Where an assessee is a dual resident, treaty residence must be determined by the tie-breaker test of permanent home and centre of vital interests, and a factual finding that the centre of vital interests lies outside India prevails over domestic residency consequences for the disputed period.

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