Treaty residence and liable to tax under the Indo-UAE DTAA do not require actual tax payment in the UAE.

"Liable to tax" under the Indo-UAE tax treaty includes a person on whom the other Contracting State has a taxing right by reason of residence, domicile, place of management, place of incorporation or a similar criterion, even if that right is not actually exercised. Actual payment of tax in the UAE is therefore not a for treaty entitlement. The later protocol was noted as confirming that treaty benefits are not contingent on proof of actual dual taxation. On that basis, a UAE resident was treated as entitled to protection under the agreement.

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Issues: Whether a UAE resident was entitled to treaty protection under the Indo-UAE Double Taxation Avoidance Agreement despite not being actually subjected to tax in the UAE.

Analysis: The governing question was the meaning of "liable to tax" in the treaty context. The Tribunal followed its earlier view that actual payment of tax in the other Contracting State is not a prerequisite for availing treaty benefits. It held that the expression covers cases where the other State has the right to tax by reason of domicile, residence, place of management, place of incorporation, or a similar criterion, even if that right is not exercised. The subsequent protocol amending the treaty was also noted as confirming that treaty entitlement is not conditioned on actual dual taxation.

Conclusion: The assessee was entitled to the benefit of the Indo-UAE Double Taxation Avoidance Agreement.

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