Treaty relief for foreign assignment salary applied where employment was exercised in Singapore and payment in India was administrative.

Salary received in India by a non-resident deputed on foreign assignment was held not taxable in India where the employment was exercised in Singapore and the assessee was a Singapore tax resident with a Tax Residency Certificate. The Tribunal applied Article 15 of the India-Singapore DTAA and accepted that administrative payment in India did not alter the source of the employment income. Treaty relief was available on the facts found, subject to verification by the Assessing Officer that the income had actually suffered tax in Singapore and that no foreign tax credit had been claimed there for Indian tax paid.

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Issues: Whether salary received in India by an assessee deputed on a foreign assignment was taxable in India, or whether relief under the India-Singapore DTAA was available on the footing that the employment was exercised in Singapore.

Analysis: The assessee was a non-resident in India and a tax resident of Singapore, supported by a Tax Residency Certificate. The salary was paid in India for administrative convenience, but the employment was exercised in Singapore. The Tribunal held that the treaty benefit under Article 15 was available because the income had arisen from employment exercised outside India, and the assessee had also shown that the income was offered to tax in Singapore. The matter was, however, made subject to verification by the Assessing Officer that the income had in fact suffered tax in Singapore and that no foreign tax credit had been claimed there for taxes paid in India.

Conclusion: Salary attributable to the foreign posting was not taxable in India on the facts found, and the assessee was entitled to treaty relief, subject to verification of the Singapore taxation position.

Final Conclusion: The revenue's challenge failed on the substantive taxability issue, and the assessment was sustained only to the limited extent of verification directed to the Assessing Officer.

Ratio Decidendi: Salary derived from employment exercised in a foreign jurisdiction is taxable in that jurisdiction under the applicable DTAA, even if the amount is received in India for administrative convenience, where the assessee is a treaty resident of the foreign state and the factual tax incidence there is established.

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