CIT v. Sakakibara Yutaka (2012) 210 Taxman 286 (Delhi)(High Court)

S.6(6) : Residence in India – Not ordinary resident – Income deemed to accrue or arise in India – DTAA-India-Japan – When provisions of Income-tax Act were more beneficial to assessee, same should have been preferred over DTAA, since assessee was a person ‘not ordinarily resident’ in India – Salary earned in Japan for employment under section could not be assessed in India – Income earned by assessee outside India could not be taxed in India. (Ss. 5(1)(c ), 9(1)(i), 90(2), Art. 15 )

Assessee was a permanent resident of Japan. He was employed with a Japanese Company S. By virtue of a collaboration agreement entered into between S and an Indian company M, assessee was deputed to India to offer guidance and technical assistance to M. During relevant previous year, assessee worked in India for 273 days and was not a ‘resident’ in India in any of nine out of ten previous years. Assessee received salary from S in Japan. Assessing Officer held that assessee was liable to tax in respect of salary received by him in Japan. Tribunal found that provisions of Income-tax Act were more beneficial to assessee, same should have been preferred over DTAA, and, thus income earned by assessee outside India could not be taxed in India. Whether since assessee was a person ‘not ordinarily resident’ in India, salary earned in Japan for employment under S could not be assessed in India. Since in the provisions of section 6(6) read with section 5(1)(c) and section 9(1)(i) were more beneficial to the assessee the same should be preferred over DTAA, accordingly the order of Tribunal was up held and appeal of revenue was dismissed.