Treaty residency under the India-US DTAA requires complete facts on vital interests before a conclusive tie-break finding.

Treaty residency under the India-US DTAA had to be determined through the Article 4(2) tie-break sequence, beginning with permanent home and then centre of vital interests. The record was incomplete on the assessee's personal and economic relations, including immediate family connections and other relevant indicators needed to assess where vital interests lay. Because the material was inadequate and unreliable for a conclusive factual finding, the residency issue could not be finally decided on the existing record. The matter was therefore remitted for fresh fact-finding and reconsideration after giving the assessee an opportunity of hearing.

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Issues: Whether the assessee's residential status for treaty purposes under the India-US DTAA had to be determined by applying the tie-break rule in Article 4(2) and whether, on the available material, the issue of centre of vital interests could be conclusively decided or required remand for fresh factual examination.

Analysis: The assessee was an ROR under domestic law, but dual residency under the treaty required application of the sequential tie-break tests in Article 4(2), beginning with permanent home and then centre of vital interests. The record did not contain adequate material regarding the assessee's immediate family, personal connections, and exact economic linkage in India and the US. The Tribunal noted that the factual matrix necessary to assess personal and economic relations was incomplete, and that a reliable quantification of the spouse's income component and other relevant indicators was not available. In the absence of these critical facts, a conclusive determination on treaty residency was not possible.

Conclusion: The matter could not be finally decided on the existing record and had to be sent back to the Assessing Officer for fresh examination of the tie-break factors.

Final Conclusion: The controversy on treaty residency was restored to the Assessing Officer for a fresh factual determination, with appropriate opportunity of hearing to the assessee.

Ratio Decidendi: Where the material necessary to determine the centre of vital interests under a treaty tie-break clause is incomplete or unreliable, the proper course is to remand the matter for fresh fact-finding rather than to record a final conclusive finding on residency.

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