A person of Indian origin who subsequently obtained American Citizenship and stayed in USA for 15 years has returned to India recently and has constructed a house property in India only for his residence. His majority of the assets are located in USA, from which he earns interest, dividends.
As per the amended provisions of Section 6 (6) of the I.T.ACT, 1961, he is Resident and Ordinarily Resident.
But, to bring his income earned in USA to taxation in India, he should be a resident in terms of the DTAA entered into between USA and India in terms of Section 90 of the Income-tax Act, 1961.
As per the said Agreement if he is considered as Resident of USA, then such income earned in USA is taxable only in USA as per its domestic tax laws and not in India.
In our view, since he is an American Citizen having substantial investment in USA, (he is not gainfully employed in India), the centre of vital interest is in USA., he should be deemed to be a Resident of USA and in which case, the income accruing to him by way of interest and dividends in USA is not taxable in India.