We are pleased to share our RSM India Newsflash titled “Bangalore ITAT rejects the claim of non-resident status denying the benefit claimed under the DTAA”.

This Newsflash summarises a recent ruling of the Hon’ble Bangalore Bench of the Income Tax Appellate Tribunal in the case of Shri Binny Bansal v. DCIT, wherein the Tribunal rejected the assessee’ s claim of being a non-resident in India under section 6(1)(c) of the Income-tax Act, 1961 (“the Act”), read with Explanation 1 thereto.

The Tribunal also held the assessee to be a resident of India under Article 4 of the India–Singapore Double Taxation Avoidance Agreement (“DTAA”), after analysing each limb of the tie-breaker rule in detail. Consequently, the Tribunal denied the benefits claimed under Article 13(4) of the DTAA in respect of indirect transfer of shares in India.

The ruling provides important guidance on:

  • Interpretation of Explanation 1(a) and 1(b) to section 6(1)(c);
  • Evaluation of substance over form in cross-border employment arrangements; and
  • Application of DTAA tie-breaker tests, including permanent home, centre of vital interests and nationality.

We hope you find this update useful. 

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