DTAA art 16

DTAA art 16 — the law in short

What the courts have decided on section DTAA art 16, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Stanley Keith Kinnett v CIT Advance RulingHelps taxpayerValidity unconfirmed
  Our American employee spent 76 days in India working at our group's Indian branch. The branch meets his housing, car and utility bills locally, but the US parent reimburses the branch. Is his salary taxable in India?
  No. The Authority ruled that a US-resident executive posted to the Indian branch of a US subsidiary was not liable to tax in India on his remuneration, because all three conditions of article 16(2) of the India-US agreement were met. He was present in India for 76 days in 1997-98, well under 183 days; his remuneration was paid by Whirlpool Corporation, a US employer; and although the Indian branch met his local costs in the first instance, the US parent reimbursed them by periodic remittances, so the burden was not borne by a permanent establishment or fixed base in India. Having answered that, the Authority did not go into quantification. The ruling binds only the applicant.
• Von Der Mark v CIT Advance RulingCuts both waysValidity unconfirmed
  I am a German engineer on the board of an Indian company and I also consult for it from Germany. The department says everything the company pays me is directors' fees taxable in India. Is it?
  It depends, and the ruling splits the payments. The Authority held that the consultancy fees paid by Pennwalt India Ltd to a German engineering consultant for services rendered entirely from Germany were professional services within article 14 of the India-Germany agreement and taxable only in Germany, because he had no fixed base in India and his stay here was 13, 13 and 25 days in the three relevant years. It rejected the department's case that his directorship was itself a fixed base, and that his fees were salary under s.15. But the fee for attending board meetings and any similar payments fall under article 16, are taxable in India, and tax is deductible at source on them. The ruling binds only the applicant.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.