Jeanne Lee cantrill Vs DCIT (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal Delhi concerned the taxability in India of a pension received from the United States for Assessment Year 2016–17. The assessee, an American national working with the American Embassy School in New Delhi, challenged the assessment order under Section 143(3) of the Income Tax Act, 1961, which treated a pension amount of ₹28,37,342 as taxable in India. The addition was upheld by the first appellate authority.
During the proceedings, it was undisputed that the assessee was a pensioner under the Public Employees’ Retirement Association in the United States and had received a pension amounting to USD 43,042.20, which translated to ₹28,37,342 in Indian currency. The Revenue’s case rested on the fact that since the amount was received in India, it was liable to tax in India.
The Tribunal rejected this contention after examining Article 19(2) of the India–USA Double Taxation Avoidance Agreement. The Tribunal noted that under the DTAA, any pension paid by or out of funds created by a contracting state to an individual in respect of government service is taxable only in that state. The provision applies unless the recipient is both a resident and a national of the other contracting state, which was not the case here. Accordingly, the pension was held to be taxable only in the United States.
