My client is a US national who came to India to teach and wants the two-year professors' exemption in the treaty. He has no Tax Residency Certificate from the US and the department will not give him an Indian one. Can he still claim the exemption?
No. The Punjab and Haryana High Court held that a non-resident claiming relief under a treaty is hit by s.90(4) unless he obtains a certificate of residence from the government of the country of which he claims to be resident, and that a passport, an appointment letter and Form 16 are no substitute. The department's order, recited at para 4 and left undisturbed, had also said that under Rule 21AB(3) it is a person resident in India who may apply to the Assessing Officer for a certificate of residence, so that a non-resident cannot obtain an Indian TRC; the Court dismissed the writ on s.90(4) alone and made no finding of its own on that rule.
Decided by the High Court (Ajay Tewari J and Pankaj Jain J (judgment authored by Pankaj Jain J)) on 2021-12-14, reported as CWP-13703-2021 (O&M), High Court of Punjab and Haryana at Chandigarh. The treaty construed is the Double Taxation Avoidance Agreement between INDIA and the UNITED STATES OF AMERICA — Article 22 (Payments Received by Professors, Teachers and Research Scholars).. It bears on section Article 22, section 90, section 90(4), section 90(5), section Rule 21AB, section 6, section 203, section 2(7) of the Income Tax Act 1961, in Salary & Perquisites, Residence & Treaty Benefit, How Tax Law Is Read and TDS Defaults matters.
This is the Revenue-side authority on s.90(4), and it is the one most likely to be quoted against a client who has the treaty on his side but not the paperwork. It matters for three reasons. First, it makes the TRC a condition precedent, not an evidentiary convenience: the Court said in terms that the case was 'hit by Section 90(4)'. Second, it is the case in which the department's answer to the obvious follow-up question is on the record: an individual physically in India cannot ask the Indian Assessing Officer for a residence certificate to support a foreign treaty claim, because Rule 21AB(3) and (4) provide the Form 10FA application and the Form 10FB certificate only for an assessee "being a resident in India", that is for use abroad. That proposition comes from the rule itself and from the department's order at para 4, which the Court did not disturb; the Court's own reasoning at paras 13 to 15 rests on s.90(4) alone, so do not cite this judgment as a holding on Rule 21AB. Third, it is a reminder that the exemption Articles for professors, teachers and research scholars — Article 22 in the India-United States treaty, differently numbered in other treaties — sit inside the same s.90(4) gate as any other treaty relief. Set against this the Delhi High Court line, already in this library, holding that a TRC is sufficient proof of residence and beneficial ownership: those cases go to the SUFFICIENCY of a TRC that exists, whereas this case goes to the CONSEQUENCE of not having one at all, and the two are not in conflict. Note also the practical fact pattern: the taxpayer arrived on 1 February 2020, left on 21 March 2020 as the pandemic closed in, and had 49 days in India — a stay so short that he was non-resident in India, which is precisely why he needed the US certificate and could not get an Indian one.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner is a national of the United States of America who was appointed in India as Dean-cum-Professor at O.P. Jindal Global University with effect from 1 January 2020. He joined his services in India on 1 February 2020 and, owing to the Covid-19 pandemic, departed from India on 21 March 2020, a stay of 49 days in financial year 2019-20. His employer issued Form 16 under s.203 showing tax deducted at source on salary. He represented to the authorities invoking Article 22 of the INDIA-USA treaty, which exempts an individual who visits a Contracting State for a period not exceeding two years for the purpose of teaching or research at a university or other recognised educational institution, and who was immediately before the visit a resident of the other Contracting State, from tax on the remuneration for such teaching or research for a period not exceeding two years. By order dated 29 December 2020 the authorities rejected his application, reasoning that a TRC is required of a foreign national claiming relief under a DTAA on Indian income, that with 49 days in India he was a non-resident under s.6, and that under Rule 21AB(3) a resident of India may apply for a TRC but a non-resident cannot. In support of his claim the petitioner produced his passport showing US nationality, his letter of appointment and Form 16, and argued that he was not an 'assessee' within s.2(7) because no tax was payable by him for two years by virtue of Article 22.
The writ petition was dismissed (para 16). Relief under a treaty entered into under s.90 is subject to the condition in s.90(4) that the assessee provide a certificate of his being a resident in the country outside India, and to claim the benefit of Article 22 the petitioner was required to submit a certificate of residence from the Government of the USA, which admittedly he did not possess (paras 13, 14 and 15). His case was therefore hit by s.90(4) and, in the absence of a TRC and with his source of income based in India, he could not claim exemption under Article 22 (para 15).
The Court set out s.90 in full, including sub-sections (2), (2A), (4) and (5), and Article 22 of the treaty (paras 11 and 12). It held that s.90 is an enabling provision permitting the Central Government to enter into agreements for the granting of relief, but that the relief so granted is subject to the condition in s.90(4) of the assessee providing a certificate of his being a resident in a country outside India (para 13). Applying that to the facts, the petitioner had to produce a residence certificate issued by the Government of the USA and had none (para 14). The Court then characterised the claim as 'totally misfound', observing that the objective of a treaty is to avoid double taxation and not to avoid taxation, and holding that a non-resident assessee claiming a benefit under a double taxation avoidance agreement is not entitled to that benefit unless he obtains a TRC from the country of which he is resident (para 15). The department's separate reasoning, recorded at para 4 and not disturbed, was that under Rule 21AB(3) a person resident in India may apply for a certificate of residence and a non-resident cannot.
The objective of the Treaty is to avoid double taxation and not to avoid taxation.
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Handle my notice → Ask a CA on WhatsAppNo. The Punjab and Haryana High Court held that a non-resident claiming relief under a treaty is hit by s.90(4) unless he obtains a certificate of residence from the government of the country of which he claims to be resident, and that a passport, an appointment letter and Form 16 are no substitute. The department's order, recited at para 4 and left undisturbed, had also said that under Rule 21AB(3) it is a person resident in India who may apply to the Assessing Officer for a certificate of residence, so that a non-resident cannot obtain an Indian TRC; the Court dismissed the writ on s.90(4) alone and made no finding of its own on that rule. This was decided by the High Court (Ajay Tewari J and Pankaj Jain J (judgment authored by Pankaj Jain J)) and bears on section Article 22, section 90, section 90(4), section 90(5), section Rule 21AB, section 6, section 203, section 2(7) of the Income Tax Act 1961. It is reported as CWP-13703-2021 (O&M), High Court of Punjab and Haryana at Chandigarh. The treaty construed is the Double Taxation Avoidance Agreement between INDIA and the UNITED STATES OF AMERICA — Article 22 (Payments Received by Professors, Teachers and Research Scholars).. This is the Revenue-side authority on s.90(4), and it is the one most likely to be quoted against a client who has the treaty on his side but not the paperwork. It matters for three reasons. First, it makes the TRC a condition precedent, not an evidentiary convenience: the Court said in terms that the case was 'hit by Section 90(4)'. Second, it is the case in which the department's answer to the obvious follow-up question is on the record: an individual physically in India cannot ask the Indian Assessing Officer for a residence certificate to support a foreign treaty claim, because Rule 21AB(3) and (4) provide the Form 10FA application and the Form 10FB certificate only for an assessee "being a resident in India", that is for use abroad. That proposition comes from the rule itself and from the department's order at para 4, which the Court did not disturb; the Court's own reasoning at paras 13 to 15 rests on s.90(4) alone, so do not cite this judgment as a holding on Rule 21AB. Third, it is a reminder that the exemption Articles for professors, teachers and research scholars — Article 22 in the India-United States treaty, differently numbered in other treaties — sit inside the same s.90(4) gate as any other treaty relief. Set against this the Delhi High Court line, already in this library, holding that a TRC is sufficient proof of residence and beneficial ownership: those cases go to the SUFFICIENCY of a TRC that exists, whereas this case goes to the CONSEQUENCE of not having one at all, and the two are not in conflict. Note also the practical fact pattern: the taxpayer arrived on 1 February 2020, left on 21 March 2020 as the pandemic closed in, and had 49 days in India — a stay so short that he was non-resident in India, which is precisely why he needed the US certificate and could not get an Indian one. If it applies to you, the first step is this: Obtain the TRC from the tax authority of the country of residence BEFORE the salary is paid or the deduction is made, not after the assessment; s.90(4) is worded as a bar on entitlement.
The petitioner is a national of the United States of America who was appointed in India as Dean-cum-Professor at O.P. Jindal Global University with effect from 1 January 2020. He joined his services in India on 1 February 2020 and, owing to the Covid-19 pandemic, departed from India on 21 March 2020, a stay of 49 days in financial year 2019-20. His employer issued Form 16 under s.203 showing tax deducted at source on salary. He represented to the authorities invoking Article 22 of the INDIA-USA treaty, which exempts an individual who visits a Contracting State for a period not exceeding two years for the purpose of teaching or research at a university or other recognised educational institution, and who was immediately before the visit a resident of the other Contracting State, from tax on the remuneration for such teaching or research for a period not exceeding two years. By order dated 29 December 2020 the authorities rejected his application, reasoning that a TRC is required of a foreign national claiming relief under a DTAA on Indian income, that with 49 days in India he was a non-resident under s.6, and that under Rule 21AB(3) a resident of India may apply for a TRC but a non-resident cannot. In support of his claim the petitioner produced his passport showing US nationality, his letter of appointment and Form 16, and argued that he was not an 'assessee' within s.2(7) because no tax was payable by him for two years by virtue of Article 22. The matter was decided on 2021-12-14 by the High Court (Ajay Tewari J and Pankaj Jain J (judgment authored by Pankaj Jain J)). On those facts the High Court held as follows. The writ petition was dismissed (para 16). Relief under a treaty entered into under s.90 is subject to the condition in s.90(4) that the assessee provide a certificate of his being a resident in the country outside India, and to claim the benefit of Article 22 the petitioner was required to submit a certificate of residence from the Government of the USA, which admittedly he did not possess (paras 13, 14 and 15). His case was therefore hit by s.90(4) and, in the absence of a TRC and with his source of income based in India, he could not claim exemption under Article 22 (para 15).
The Court set out s.90 in full, including sub-sections (2), (2A), (4) and (5), and Article 22 of the treaty (paras 11 and 12). It held that s.90 is an enabling provision permitting the Central Government to enter into agreements for the granting of relief, but that the relief so granted is subject to the condition in s.90(4) of the assessee providing a certificate of his being a resident in a country outside India (para 13). Applying that to the facts, the petitioner had to produce a residence certificate issued by the Government of the USA and had none (para 14). The Court then characterised the claim as 'totally misfound', observing that the objective of a treaty is to avoid double taxation and not to avoid taxation, and holding that a non-resident assessee claiming a benefit under a double taxation avoidance agreement is not entitled to that benefit unless he obtains a TRC from the country of which he is resident (para 15). The department's separate reasoning, recorded at para 4 and not disturbed, was that under Rule 21AB(3) a person resident in India may apply for a certificate of residence and a non-resident cannot. In the words reproduced by the source cited on this page: "The objective of the Treaty is to avoid double taxation and not to avoid taxation."
It was decided by the High Court on 2021-12-14 and is reported as CWP-13703-2021 (O&M), High Court of Punjab and Haryana at Chandigarh. The treaty construed is the Double Taxation Avoidance Agreement between INDIA and the UNITED STATES OF AMERICA — Article 22 (Payments Received by Professors, Teachers and Research Scholars).. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section Article 22, section 90, section 90(4), section 90(5), section Rule 21AB, section 6, section 203, section 2(7), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The writ petition was dismissed (para 16). Relief under a treaty entered into under s.90 is subject to the condition in s.90(4) that the assessee provide a certificate of his being a resident in the country outside India, and to claim the benefit of Article 22 the petitioner was required to submit a certificate of residence from the Government of the USA, which admittedly he did not possess (paras 13, 14 and 15). His case was therefore hit by s.90(4) and, in the absence of a TRC and with his source of income based in India, he could not claim exemption under Article 22 (para 15). It arises in Salary & Perquisites, Residence & Treaty Benefit, How Tax Law Is Read and TDS Defaults matters, on section Article 22, section 90, section 90(4), section 90(5), section Rule 21AB, section 6, section 203, section 2(7) of the Income Tax Act 1961, and was decided by Ajay Tewari J and Pankaj Jain J (judgment authored by Pankaj Jain J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not apply to the Indian Assessing Officer in Form 10FA for a client who is a non-resident; Rule 21AB(3) confines that route to a person resident in India. File Form 10F with the information in Rule 21AB(1), and keep the supporting documents under Rule 21AB(2A), because the TRC alone will not carry the particulars the rule requires unless the foreign certificate happens to contain them. Where the exemption relied on is a professors-and-teachers Article, read the Article number in YOUR treaty — it is Article 22 in the India-US treaty and is numbered differently elsewhere — and check the two-year limit and the condition of residence in the other state immediately before the visit. If the client has already suffered deduction at source without a TRC, consider whether the certificate can still be obtained and the relief claimed in the return, and record the attempt; this judgment decides entitlement, not the machinery for a later claim. Do not argue that a person is outside the definition of 'assessee' in s.2(7) because the treaty exempts him; that argument was advanced here and rejected.
Validity check could not be completed. Validity check could not be completed. No search for an appeal against this judgment, or for later High Court or Tribunal treatment of it, was carried out on this pass. Readers should note in particular that the interaction between this decision and the Delhi High Court line holding a TRC sufficient proof of residence and beneficial ownership has not been traced here; those decisions concern the weight of a TRC that exists and this one concerns the absence of any TRC, but a later pass should check whether any court has read them together. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment has 16 numbered paragraphs and was read in full in one pass; the disposal at para 16 matched the one returned in a separate header pass. Two points on the text. (1) At para 11 the judgment reproduces s.90 in full, including sub-sections (2A), (4) and (5) and Explanations 1 to 4, but it reproduces Explanation 4 under the rubric 'Following Explanation 4 shall be inserted after Explanation 3 to Section 90 by the Finance Act, 2017, w.e.f. 1-4.2018', which is the annotation style of a printed commentary edition rather than the operative text; the judgment is dated December 2021, well after that date. The dating artefact is noted, not relied on. (2) The department's reasoning quoted at para 4 refers to the 182-day and 60-plus-365-day tests in s.6, and the written statement at para 9 restates them; those are tests of residence in INDIA and are recited here as the department's reasoning, not as the ratio. (3) Rule 21AB is mentioned in this judgment only in recitations of the department — at para 4, quoting the impugned order, and at para 9, in the respondent's written statement. Paragraphs 13 to 16, which are the whole of the Court's own reasoning and its disposal, do not mention the rule. The ratio is s.90(4) alone. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was dismissed (para 16). Relief under a treaty entered into under s.90 is subject to the condition in s.90(4) that the assessee provide a certificate of his being a resident in the country outside India, and to claim the benefit of Article 22 the petitioner was required to submit a certificate of residence from the Government of the USA, which admittedly he did not possess (paras 13, 14 and 15). His case was therefore hit by s.90(4) and, in the absence of a TRC and with his source of income based in India, he could not claim exemption under Article 22 (para 15).
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