Treaty residency under the centre of vital interests test was remanded for fresh factual determination on incomplete evidence.

Treaty residency under Article 4(2) of the India-US DTAA depended on the centre of vital interests, requiring reliable evidence of personal and economic ties. Because the record was incomplete on matters such as family residence pattern, foreign income composition, and the extent of links in each country, the Tribunal found that treaty residence could not be conclusively determined on the available material. It therefore remitted the matter for fresh factual examination, directing the assessing authority to reconsider the tie-break indicators after giving the assessee an opportunity to furnish further evidence.

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Issues: Whether, on the available material, the assessee's treaty residency for the relevant assessment year was to be determined under the tie-break rule in Article 4(2) of the India-US Double Taxation Avoidance Agreement, and whether the matter required remand for further factual inquiry.

Analysis: The assessee was admittedly a resident and ordinarily resident under the domestic law, while also claiming residence in the United States for treaty purposes. The decisive question was the centre of vital interests under Article 4(2), which required evaluation of personal and economic relations on the basis of reliable facts. The material placed before the Tribunal was incomplete on critical aspects such as the family's residence pattern, the breakup of foreign income, and the extent of economic links in each country. The Tribunal noted that the indicators relevant to personal and economic ties were not adequately established on record and that the available facts were insufficient to determine the treaty residence conclusively. In these circumstances, the proper course was to restore the matter to the Assessing Officer for fresh examination with opportunity to the assessee to furnish the necessary evidence and for application of the relevant treaty indicators.

Conclusion: The treaty residency issue was not finally determined on merits and the matter was remanded for fresh factual adjudication, with directions to apply the tie-break indicators under Article 4(2).

Final Conclusion: The assessee obtained a remand for reconsideration of the treaty-residency question, and the assessment was set aside for fresh determination on the limited factual issue.

Ratio Decidendi: Where treaty residency depends on the centre of vital interests and the material facts necessary to test personal and economic ties are inadequately established, the dispute must be remitted for fresh factual determination rather than decided on incomplete records.

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