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of <h1>Indian resident's US salary income taxable in US under Indo-US DTAA Article 16(2)</h1> <h3>Somnath Duttagupta Versus ACIT, Circle-2 (1), Kolkata</h3> Somnath Duttagupta Versus ACIT, Circle-2 (1), Kolkata - [2024] 111 ITR (Trib) 385 (ITAT [Kolk]) Issues Involved:1. Addition of salary income received in India for services rendered in the US.2. Determination of residential status of the assessee.3. Application of Article 16 of the Indo-US Double Taxation Avoidance Agreement (DTAA).Summary:Issue 1: Addition of Salary Income Received in India for Services Rendered in the USThe assessee, employed with PricewaterhouseCoopers Private Limited (PWC) India, was on an international assignment to the USA during the relevant assessment year. The salary was received in India but was for services rendered in the USA and was also taxed in the USA. The assessee did not declare this income in his Indian Income Tax Return to avoid double taxation. The Assessing Officer (AO) added this salary to the assessee's income in India due to the absence of a tax resident certificate from the USA.Issue 2: Determination of Residential Status of the AssesseeThe assessee claimed non-resident status in India, having stayed in India for only 16 days during the relevant year. The AO required proof of the assessee's stay in India over the past four years to determine his residential status under section 6(1)(c) of the Income Tax Act. The CIT(A) found that the assessee qualified as a non-resident due to his limited stay in India but held that the salary income was still taxable in India as it was paid by an Indian employer and controlled by Indian employment terms.Issue 3: Application of Article 16 of the Indo-US DTAAThe CIT(A) observed that the conditions of Article 16 of the Indo-US DTAA were not satisfied for exemption from Indian taxation. The Tribunal, however, disagreed, stating that the employment was exercised in the USA, and thus, the salary should be taxed in the USA under Article 16(1) of the DTAA. The Tribunal clarified that all conditions under Article 16(2) must be satisfied simultaneously for the exception to apply, which was not the case here.Conclusion:The Tribunal concluded that the salary income was taxable in the USA and not in India, as per Article 16(1) of the Indo-US DTAA. The appeal of the assessee was allowed, and the additions made by the AO were ordered to be deleted.
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