Treaty benefit cannot be denied merely for absence of a Tax Residency Certificate where non-resident status is otherwise established.

Where a non-resident assessee earned salary and foreign allowances for services rendered outside India, treaty relief under the India-Austria DTAA was available because the substantive conditions for exemption were otherwise satisfied. The Tribunal held that non-production of a Tax Residency Certificate by itself did not justify denial of treaty benefit when non-resident status and foreign employment were established. The addition was therefore held unsustainable and the assessee was entitled to exemption under the treaty.

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Issues: Whether a non-resident assessee was entitled to exemption under the India-Austria DTAA for salary and foreign allowances earned for services rendered outside India, and whether denial of treaty benefit for non-production of a Tax Residency Certificate was justified.

Analysis: The assessee was treated as a non-resident for the relevant year and the income in dispute related to services rendered outside India. The Tribunal followed its earlier coordinate bench decisions holding that the benefit of the treaty could not be denied merely for want of a Tax Residency Certificate where the surrounding facts established treaty entitlement. It was noted that the salary and foreign allowance were connected with employment exercised outside India, and that the absence of the certificate did not by itself displace the substantive treaty position. The Tribunal also relied on the settled view that treaty protection prevails where its conditions are otherwise satisfied.

Conclusion: The assessee was entitled to exemption under the DTAA, and the addition made by the Assessing Officer was not sustainable.

Final Conclusion: The appeal was decided in favour of the assessee on the ground that treaty relief could not be denied solely because the Tax Residency Certificate was not produced when non-resident status and foreign employment were otherwise established.

Ratio Decidendi: Where the assessee's non-resident status and foreign employment are established, treaty benefit under a double taxation agreement cannot be denied merely for non-production of a Tax Residency Certificate if the substantive conditions for exemption are otherwise satisfied.

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