Sameer Malhotra Vs. Assistant Commissioner of Income Tax- [2023] 146 taxmann.com 158 (Delhi - Trib.)[28-12-2022]
- The assessee filed his Return of Income (‘ROI’) for FY 2014-15 declaring Indian income and Foreign income. Thereafter, the assessee filed a revised return declaring only Indian income and claimed that the foreign income is not taxable in India as he is entitled to claim the India – Singapore DTAA benefit on account of being a resident of Singapore as per the tie-breaker test of India – Singapore DTAA.
- The case of the assessee was that he was employed in India till November 2014 and, thereafter he shifted with his family to Singapore and also received Singapore Tax Residency Certificate covering the period 2014-16.
- Assessee claimed that since he is a tax resident of Singapore based on a tie-breaker test, his Singapore-sourced income should not be taxed in India.
- Assessee’s case was selected under CASS and the Assessing Officer (‘AO’) rejected the revised return as he held that based upon the tie-breaker questionnaire, the assessee’s residency in Singapore is a fallacious assumption and cannot be accepted. Further, since the assessee was in India for > 182 days during FY 14-15, his global income would be taxed in India.
- Aggrieved by this, the assessee filed an appeal with the CIT(A), wherein CIT(A) held that since the assessee has a permanent home available in India (though given on rent) whereas in Singapore the property resided in a rented property for the specified period only. Further, the fact that after completion of the assignment in Singapore, the assessee stayed in India thereafter, and thus, the test of habitual abode is also in favour of India. Furthermore, CIT(A) held that the assessee’s center of vital interest is in India since the majority of the assessee’s savings, investments and personal bank accounts are in India. Thus, basis this, CIT(A) directed the AO to tax the income as per the original return filed by the assessee and held that there is no merit in the claim of the assessee that ties are breaking in favour of Singapore.
- Aggrieved by the decision of CIT(A), assessee filed an appeal before Income Tax Appellate Tribunal (Delhi).
Issue under consideration:
Whether assessee would be considered a resident of Singapore for the period starting from 15th December 2014 to 31st March 2015 as per the tie-breaker test and thus, income earned in Singapore during that period is not taxable in India?
Assessee’s contention before ITAT:
- Assessee contended that he re-located to Singapore for work along with his entire family and thus he qualified as a Singapore resident and resident and ordinary resident of India under Indian Law.
- The assessee further claimed that since he is a resident of both countries, his residency for the period 15th December 2014 to 31st March 2015 is to be determined on the basis of the tie-breaker test laid down in India – Singapore DTAA.
- On the tie-breaker test, the assessee claimed that he had a permanent home available in Singapore from the day he started his employment whereas an Indian home is let out during the period under consideration and hence the assessee claimed that the permanent home test is broken in favour of Singapore.
- With respect to the center of vital interest test, the assessee claimed that since he had relocated to Singapore with his family and started earning employment in Singapore and claimed that the center of vital interest test is also broken in favour of Singapore.
- Apart from the above, in support of the assessee’s contention, submitted Singapore Tax Residency Certificate for the year 2014-15.
Learned Departmental Representative’s (Ld. DR) Contention:
- In the tie-breaker questionnaire since the assessee has selected India in most of the columns pertaining to owning a home in the home country, the country in which the assessee has the majority of the savings/ investments/ bank accounts, and the country where the assessee cast votes and therefore the Ld. DR submitted that the assessee should be considered a resident of India. Consequently, his Singapore income should be taxed in India.
- As the assessee stayed in a rented apartment in Singapore with his family, held Singapore driving license & overseas bank account and his house in India was not available as the same was on rent during the period under consideration. Therefore, the permanent home test goes in favour of Singapore.
- Further, vital interest also lies in Singapore as the assessee has shifted to Singapore along with his family and started earning then onwards irrespective of the assessee holding the majority of his savings, investments, and bank accounts in India. Consequently, his personal and economic relations also remained in Singapore.
- Habitual abode does not only mean permanent home but also includes the place where one normally resides. Since the assessee during the period under consideration resided in Singapore, his habitual abode is also to be considered as Singapore.
- Consequently, on the above grounds assessee could be considered as a resident of Singapore, and therefore, the Tribunal directed the AO to accept the revised return of the Income filed by the assessee.
This is a significant and one of the only judgement rendered till now in the context of split tax residency for individuals and application of the corresponding tie-breaker test criteria under DTAA. Though the assessee had satisfied the first criterion of the permanent home itself, the ITAT went on further to test other criteria as well. It may also be noted that the assessee probably would have failed the habitual abode test as per the revised commentary (2017 version) of OECD MTC.
