For many Indians working overseas, life often feels split between two worlds. Home is where family lives, memories are rooted, and festivals are celebrated. Work, however, may be thousands of miles away. In most cases, the passport quietly records this reality with stamps that speak louder than words.
But sometimes, tax authorities read those stamps very differently.
This is exactly what happened in a recent and widely discussed decision of the Chennai Bench of the Income Tax Appellate Tribunal (ITAT) [ACIT vs. Paul Dhinakaran, 2025], where an individual working in the United States suddenly found his foreign income being taxed in India, despite filing returns as a Non-Resident for years.
What followed was a legal tug-of-war that answers a question many global Indians worry about: Does holding a senior role abroad make you a “resident” for Indian tax purposes?
Let’s walk through this story.
A Life Lived Across Borders, But Taxed at Home?
The taxpayer had been living and working in the United States since 2011. For the assessment years 2015–16 to 2018–19, he consistently filed his Indian tax returns as a Non-Resident, declaring only his Indian income.
A search action conducted in January 2021 changed everything. The tax department reopened past assessments and took a firm view: Since the individual had spent over 60 days in India in each relevant year and more than 365 days in the preceding four years, he should be treated as a Resident.
Once this label was applied, the consequences were severe. Foreign bank deposits, overseas credit card spends, and even personal expenses incurred abroad, running into crores, were added to his taxable income in India.
The message was clear: “You may live abroad, but we believe your tax home is still India.”
Leaving India for Work: Why the Reason Matters More Than the Days
Indian tax law does not look only at how long you stayed in India. It also looks at why you left.
There is a specific relief built into the law for Indian citizens who leave India for employment outside India. In such cases, the usual 60-day rule is relaxed, and the individual is treated as a resident only if they stay in India for 182 days or more in that year.
This provision exists for a reason, it recognises the realities of global employment.
The central question before the appellate authorities was simple, yet powerful: Was the taxpayer genuinely employed abroad, or merely managing things from overseas while still being India-based?
President Abroad, Employee or Controller?
The tax department argued that the individual was not an “employee” in the usual sense. He was the President of a US-based organisation, held a key leadership role, and his family members were involved in related activities.
According to the department, this level of influence meant he was not really “working under employment” but effectively controlling affairs.
The appellate authority, however, looked beyond titles. What mattered was not the designation, but the substance of the relationship.
The records told a consistent story:
- A formal employment offer issued by the US entity.
- Regular salary paid and disclosed in US tax returns.
- Mandatory filings made in the US showing his compensation as President.
- A valid US employment visa naming the organisation as his employer.
- Full-time engagement confirmed year after year.
Leadership, the Tribunal noted, does not cancel employment. You can be a President, CEO, or senior executive, and still be an employee.
Passports Don’t Lie, Assumptions Often Do
One of the most decisive factors was travel data.
The appellate authority carefully examined passport entries and stay records. In each of the four years under dispute, the taxpayer’s stay in India was less than 182 days.
This factual position was never disproved by the tax department.
Tax residency, the Tribunal reminded, is not based on assumptions about influence, family ties, or perceived control. It is based on objective criteria, days of stay and the purpose of leaving India.
Once those conditions were satisfied, the law had to follow.
Foreign Income Cannot Be Pulled Into India by Force
Having accepted that the taxpayer was a Non-Resident, the rest followed logically.
Money parked in foreign bank accounts, expenses charged on overseas credit cards, income earned and taxed abroad, none of these could be taxed in India merely because they appeared “large” or “significant”.
Tax law does not punish scale. It only examines source and status.
The Tribunal upheld the deletion of all major additions relating to foreign income and expenses.
A Small But Important Reminder on Personal Gifts
Not everything went the taxpayer’s way. For two of the years, minor additions relating to personal gifts were upheld. These were based on seized records where the gifts recorded were higher than what was disclosed in the returns.
The amounts were small, but the principle was important: Where specific evidence exists, tax authorities are within their rights to act.
This part of the order serves as a quiet reminder: documentation and consistency always matter.
Why This Decision Matters for Indians Working Overseas
This ruling reinforces several practical truths for global Indians:
- Senior roles abroad do not automatically make you an Indian tax resident.
- Employment is defined by relationship, not hierarchy.
- Foreign income cannot be taxed in India unless residency conditions are met.
- Passport records remain one of the strongest pieces of evidence.
- Clear paperwork across countries can save years of litigation.
Most importantly, it restores confidence that tax law, when applied correctly, respects global mobility rather than penalising it.
For professionals living international lives, that reassurance is invaluable.
And sometimes, all it takes is a careful reading of the law and a passport that tells the truth.