Non-resident salary taxation turns on India receipt or accrual, with treaty relief available on verified US residency evidence.

Salary received in India by a non-resident for services rendered outside India is taxable only if it is received or deemed to be received in India, or accrues or is deemed to accrue in India; for salary, deemed accrual depends on services being rendered in India under section 5(2) read with section 9(1)(ii). The Tribunal noted that the assessee claimed USA treaty residence and produced a US Tax Residency Certificate as additional evidence, and the claim was to be examined on verification of that certificate's authenticity. If the certificate is genuine, relief under section 90 and Article 16(1) of the India-USA DTAA is available.

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Issues: Whether salary received in India by a non-resident for services rendered outside India is taxable in India and whether relief under section 90 read with Article 16(1) of the India-USA DTAA is on production of a valid US Tax Residency Certificate.

Analysis: The governing framework was section 5(2) of the Income-tax Act, 1961 read with section 9(1)(ii), under which salary income of a non-resident is taxable in India only if it is received or deemed to be received in India or if it accrues or is deemed to accrue in India, with salary deemed to accrue in India only where the services are rendered in India. The record showed that the assessee claimed treaty residence in the USA and produced a US Tax Residency Certificate as additional evidence, while the Revenue sought verification. The Tribunal treated the additional evidence as material to the substantial issue and held that the claim could be examined on verification of the authenticity of the certificate.

Conclusion: The salary addition was not finally sustained and the matter was sent for verification of the US Tax Residency Certificate. If the certificate is found genuine, relief under section 90 and Article 16(1) of the India-USA DTAA is to be granted.

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