2023 (1) TMI 566 - AT - Income Tax

DTAA Rules: Resident of Singapore not Taxable in India

Sameer Malhotra Versus ACIT Circle 80 (1), New Delhi

Sameer Malhotra Versus ACIT Circle 80 (1), New Delhi - TMI Issues Involved:1. Determination of the Appellant's residency status for the assessment year 2015-16.2. Taxability of income earned by the Appellant in Singapore under the India-Singapore Double Taxation Avoidance Agreement (DTAA).Issue-wise Detailed Analysis:1. Determination of the Appellant's Residency Status:The Appellant filed a return of income declaring Rs.1,59,36,999/- earned from DBOI Global Services Pvt. Ltd. in India and J.P. Morgan Chase & Co., Singapore. The return was later revised, claiming only Rs.47,82,630/- as taxable in India, excluding income earned in Singapore. The Assessing Officer (AO) determined that the Appellant was a resident of India for the financial year 2014-15 as he was physically present in India for 182 days or more, per Section 6(1)(a) of the Income-tax Act, 1961. The AO rejected the revised return, assessing the income as declared in the original return.The Appellant argued that he was a resident of both India and Singapore and that his residency should be determined under Article 4(2) of the India-Singapore DTAA. The Commissioner of Income-tax (Appeals) held that the Appellant had a permanent home in India, thus deeming him a resident of India. The Commissioner also noted that the Appellant's personal and economic relations (center of vital interests) were closer to India.2. Taxability of Income Earned in Singapore:The Appellant contended that he relocated to Singapore with his family on 6th December 2014 and became a resident of Singapore for the calendar year 2014-15. He claimed that his permanent home was in Singapore during his employment there, and his home in India was let out. The Appellant produced a Tax Resident Certificate from Singapore Revenue Authorities and argued that under Article 4(2) of the DTAA, he should be considered a resident of Singapore.The Department Representative (DR) pointed to the tie-breaker questionnaire, which indicated the Appellant's ties to India, including savings, investments, and personal bank accounts. The authorities below concluded that the Appellant was liable to be taxed in India for the income earned in Singapore.Tribunal's Analysis:The Tribunal considered the rival submissions and the material on record. It noted that the Appellant had shifted to Singapore with his family and rented an apartment there. The Appellant also held a Singapore Driving License and had paid taxes in Singapore. The Tribunal observed that the tie-breaker questionnaire should not be the sole basis for determining residency and emphasized the importance of the DTAA provisions, which prevail over general provisions of the Income-tax Act.The Tribunal referred to a similar case, Raman Chopra vs. DCIT, where the Appellant's residency was determined based on the tie-breaker analysis under the India-USA DTAA. It highlighted that the Appellant had a permanent home and habitual abode in Singapore during the period under consideration, thus qualifying as a resident of Singapore.The Tribunal concluded that the Appellant's personal and economic relations were in Singapore during the relevant period, and habitual abode was also in Singapore. Therefore, under Article 4(2) of the DTAA, the Appellant should be considered a resident of Singapore. It directed the AO to accept the revised return of income filed by the Appellant, excluding the income earned in Singapore from Indian taxation.Conclusion:The Tribunal allowed the appeal, holding that the Appellant was a resident of Singapore for the period from 15th December 2014 to 31st March 2015 and that the income earned in Singapore during this period was not taxable in India. The AO was directed to accept the revised return of income filed by the Appellant.