The officer says my client pays no tax in Dubai, so the India-UAE agreement cannot apply to him. Is that right?
No. The Delhi Tribunal held that a resident of the UAE is entitled to the benefit of the India-UAE agreement even though the UAE levies no tax on him. Being 'liable to tax' in a Contracting State does not require that tax was actually paid; it is enough that the State has the right to tax, whether or not the right is exercised. The Assessing Officer's reasoning that there was no double taxation, so no relief was due, was rejected.
Decided by the ITAT (Income Tax Appellate Tribunal, Delhi Bench 'D' - Dr. B.R.R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member); ITA No. 3243/Del/2023; AY 2021-22) on 2024-10-23, reported as ITA No. 3243/Del/2023; [2024] 168 taxmann.com 418 (Delhi-Trib.). It bears on section 90, section 90(2), section 90(4), section 6 of the Income Tax Act 1961, in Residence & Treaty Benefit and Capital Gains matters.
This is the first question an officer asks a Gulf client: if you paid nothing there, what are you relieved of? The answer decides whether the treaty is available at all, before any tie-breaker or any allocation article is reached. The department's usual counter is the one taken here — that an individual is outside the definition of 'person' in the UAE tax decree, so there is no liability and therefore no residence. The Tribunal did not accept it.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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For assessment year 2021-22 the assessee, resident in the UAE, earned capital gains of Rs 1,54,01,166 on the sale of debt mutual funds in India and did not offer them, claiming that under Article 13(5) of the India-UAE agreement they were taxable only in the UAE. The Assessing Officer refused the claim, taking the view that an individual falls outside the definition of 'person' in the UAE tax decree and that the assessee paid no tax in the UAE, so no double taxation had occurred and no relief was due.
The appeal was allowed. The assessee was held eligible for the benefit of the India-UAE agreement notwithstanding that no tax was payable by him in the UAE.
The Tribunal framed the single issue as whether the assessee is entitled to exemption in India where the UAE authorities choose not to tax him, the agreement having allocated the capital gain to the UAE (para 6). It answered it by setting out a line of coordinate-bench orders at length rather than reasoning afresh: Addl. DIT v. Frate Line, Dubai (para 8), ITO (IT) v. Rameshkumar Goenka (para 9) and Dy. CIT (International Taxation) v. K.E. Faizal (para 10), each recorded as followed, with Asstt. DIT v. Green Emirate Shipping & Travels reproduced at para 11. The proposition taken from them, in the words reproduced at paras 8 and 9, is that being liable to tax in a Contracting State does not require that the person actually be liable to tax there under an existing legal provision, and extends to the case where that State has the right to tax whether or not the right is exercised, an agreement preventing potential as well as current double taxation. Para 12 is the whole of the Tribunal's own reasoning: on the parity of the facts, on that judicial proposition and because the Revenue put no contrary judgment before it, the assessee was held eligible for the benefit of the agreement. There is no independent construction of Article 4 or of s.90 anywhere in the order.
12. Hence, keeping in view, the parity of the facts, the judicial proposition laid down and in the absence of any contrary judgments brought to our notice, we hold that the assessee is eligible to get benefit of the India-UAE DTAA.
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Handle my notice → Ask a CA on WhatsAppNo. The Delhi Tribunal held that a resident of the UAE is entitled to the benefit of the India-UAE agreement even though the UAE levies no tax on him. Being 'liable to tax' in a Contracting State does not require that tax was actually paid; it is enough that the State has the right to tax, whether or not the right is exercised. The Assessing Officer's reasoning that there was no double taxation, so no relief was due, was rejected. This was decided by the ITAT (Income Tax Appellate Tribunal, Delhi Bench 'D' - Dr. B.R.R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member); ITA No. 3243/Del/2023; AY 2021-22) and bears on section 90, section 90(2), section 90(4), section 6 of the Income Tax Act 1961. It is reported as ITA No. 3243/Del/2023; [2024] 168 taxmann.com 418 (Delhi-Trib.). This is the first question an officer asks a Gulf client: if you paid nothing there, what are you relieved of? The answer decides whether the treaty is available at all, before any tie-breaker or any allocation article is reached. The department's usual counter is the one taken here — that an individual is outside the definition of 'person' in the UAE tax decree, so there is no liability and therefore no residence. The Tribunal did not accept it. If it applies to you, the first step is this: Establish residence of the UAE under Article 4(1)(b) of the agreement on its own terms — presence in the UAE for at least 183 days in the calendar year concerned — rather than arguing about what tax was paid there.
For assessment year 2021-22 the assessee, resident in the UAE, earned capital gains of Rs 1,54,01,166 on the sale of debt mutual funds in India and did not offer them, claiming that under Article 13(5) of the India-UAE agreement they were taxable only in the UAE. The Assessing Officer refused the claim, taking the view that an individual falls outside the definition of 'person' in the UAE tax decree and that the assessee paid no tax in the UAE, so no double taxation had occurred and no relief was due. The matter was decided on 2024-10-23 by the ITAT (Income Tax Appellate Tribunal, Delhi Bench 'D' - Dr. B.R.R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member); ITA No. 3243/Del/2023; AY 2021-22). On those facts the ITAT held as follows. The appeal was allowed. The assessee was held eligible for the benefit of the India-UAE agreement notwithstanding that no tax was payable by him in the UAE.
The Tribunal framed the single issue as whether the assessee is entitled to exemption in India where the UAE authorities choose not to tax him, the agreement having allocated the capital gain to the UAE (para 6). It answered it by setting out a line of coordinate-bench orders at length rather than reasoning afresh: Addl. DIT v. Frate Line, Dubai (para 8), ITO (IT) v. Rameshkumar Goenka (para 9) and Dy. CIT (International Taxation) v. K.E. Faizal (para 10), each recorded as followed, with Asstt. DIT v. Green Emirate Shipping & Travels reproduced at para 11. The proposition taken from them, in the words reproduced at paras 8 and 9, is that being liable to tax in a Contracting State does not require that the person actually be liable to tax there under an existing legal provision, and extends to the case where that State has the right to tax whether or not the right is exercised, an agreement preventing potential as well as current double taxation. Para 12 is the whole of the Tribunal's own reasoning: on the parity of the facts, on that judicial proposition and because the Revenue put no contrary judgment before it, the assessee was held eligible for the benefit of the agreement. There is no independent construction of Article 4 or of s.90 anywhere in the order. In the words reproduced by the source cited on this page: "12. Hence, keeping in view, the parity of the facts, the judicial proposition laid down and in the absence of any contrary judgments brought to our notice, we hold that the assessee is eligible to get benefit of the India-UAE DTAA." The decision followed or applied Addl. DIT v. Frate Line, Dubai [2010] 3 taxmann.com 769 (Mum.) - followed at para 8; ITO (IT) v. Rameshkumar Goenka [2010] 39 SOT 132 (Mum.) - followed at para 9; Dy. CIT (International Taxation) v. K.E. Faizal [2019] 108 taxmann.com 545/178 ITD 383 (Cochin)(Trib.) - followed at para 10; Asstt. DIT v. Green Emirate Shipping & Travels [2006] 100 ITD 203/6 SOT 329 (Mum.) - reproduced and relied on at para 11, but not recorded as followed.
It was decided by the ITAT on 2024-10-23 and is reported as ITA No. 3243/Del/2023; [2024] 168 taxmann.com 418 (Delhi-Trib.). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 90, section 90(2), section 90(4), section 6, 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 taxpayer. The appeal was allowed. The assessee was held eligible for the benefit of the India-UAE agreement notwithstanding that no tax was payable by him in the UAE. It arises in Residence & Treaty Benefit and Capital Gains matters, on section 90, section 90(2), section 90(4), section 6 of the Income Tax Act 1961, and was decided by Income Tax Appellate Tribunal, Delhi Bench 'D' - Dr. B.R.R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member); ITA No. 3243/Del/2023; AY 2021-22. 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. Obtain the residence certificate from the UAE authorities for the year, because s.90(4) makes it a condition of claiming relief at all. Put the 'liable to tax' point in the reply before the officer raises it, with the reasoning that the right to tax is what matters and not its exercise. Keep this order in its place: it decides eligibility for the agreement, not which article allocates a particular receipt.
Still good law. The entry carried no indiankanoon id; the order is at /doc/105859941/ (Saket Kanoi, Gurgaon v DCIT Int. Taxation, Gurgaon, ITAT Delhi, 23 October 2024, ITA No. 3243/Del/2023, AY 2021-22). Its citator returns nothing, but a name search shows the holding has been carried forward. In Saket Kanoi v ITO (International Taxation), ITAT Delhi, 25 March 2026, the Bench recorded at paragraph 4 that 'this issue already stands decided in favour of the assessee (Sh. Saket Kanoi) vide order dated 23.10.2024 of the co-ordinate bench in ITA No. 3243/Del/2023', noted at paragraph 5 that 'the identical issue has been decided in A.Y. 2021-22 in assessee's own case after elaborate discussion', and held at paragraph 6 that 'the assessee is entitled to get benefit of Article 13(5) of India UAE DTAA and capital gains from sale of mutual funds is not taxable in India'. A companion order in Mandira Kanoi v ITO (International Taxation) of the same date is to the same effect. Nothing overruling or doubting the holding that 'liable to tax' does not require tax actually to have been paid was found, and no appeal against this order or SLP was traced. 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 order has been read in full and the caution previously carried here can be withdrawn. The direction to allow the benefit on production of a copy of the tax residency certificate issued by the Ministry of Finance and Industry in the UAE was not given in this case: that sentence appears inside the extract from Asstt. DIT v. Green Emirate Shipping & Travels reproduced at para 11, where it is the Revenue's ground of appeal in that 2005 Mumbai case. Two limits stand. The decision is about capital gains under Article 13(5) and not about salary under Article 15, so it establishes eligibility for the agreement and nothing about how employment income is allocated. And it adopts a line of earlier orders rather than reasoning independently: para 12 is the operative paragraph, and it rests on the parity of the facts, on the proposition taken from those orders, and on the absence of any contrary judgment before the Bench. Of the four decisions the entry names, three are recorded as followed; Green Emirate Shipping is reproduced and relied on at para 11 but is not labelled as followed. The bench, appeal number, assessment year, date and reporter citation all match the order. Nobody has confirmed the order still stands. This does not tell you how employment income is allocated under the agreement, and it says nothing about a person who is resident of India under s.6(1) as well — the tie-breaker was not in issue. It does not deal with s.2(29A) at all. The reporter's report gives its own publication date rather than the date of order; the date recorded here is the date printed on the order itself. 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 appeal was allowed. The assessee was held eligible for the benefit of the India-UAE agreement notwithstanding that no tax was payable by him in the UAE.
TaxSphere, “Saket Kanoi v DCIT”, https://taxnotice.vittsphere.com/caselaw/case/saket-kanoi-v-dcit-uae-liable-to-tax/ (validity last checked 2026-08-24)
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