ITAT Delhi Bench rules in favor of Jeanne Lee Cantrill, affirming pension exemption under India-USA DTAA.
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, has upheld the exemption of pension received by Jeanne Lee Cantrill, an American national, from Indian taxation. The tribunal's decision, dated November 26, 2025, has reinforced the applicability of the India-USA Double Taxation Avoidance Agreement (DTAA), providing relief to Cantrill against a tax demand on her pension amounting to Rs. 28,37,342.
The case arose from an assessment order dated December 13, 2018, where the lower authorities had assessed Cantrill's pension as taxable in India. The pension, amounting to 43,042.20 USD, was received from the Public Employees' Retirement Association in the United States and was converted to Indian currency at the prevailing exchange rate.
Presiding over the case, Shri Satbeer Singh Godara, Judicial Member of the ITAT, deliberated on the applicability of Article 19(2) of the India-USA DTAA. This provision explicitly exempts pensions paid by or out of funds created by a contracting state from being taxed in the other contracting state. The tribunal noted that since the pension was paid out of funds created by the US government, it fell within the purview of this exemption.
The tribunal dismissed the Revenue's argument that the pension should be taxable in India merely because it was received here. Instead, it emphasized that the provisions of the DTAA, being more beneficial to the assessee, take precedence over the regular provisions of the Income Tax Act, 1961, as per Section 90(2) of the Act.
This ruling underscores the importance of international tax treaties and their application in protecting taxpayers from dual taxation. It also highlights the role of the ITAT in interpreting and implementing such agreements to ensure equitable tax treatment.
The appeal by Jeanne Lee Cantrill, represented by Ms. Preeti Goel, was thus allowed, setting a precedent for similar cases involving foreign nationals receiving pensions from their home countries while residing in India.
Bottom Line:
Pension received by an American national from the United States of America, under the India-USA Double Taxation Avoidance Agreement (DTAA), is exempted from taxation in India as per Article 19(2) of the DTAA, if the pension is paid by or out of funds created by the United States government.
Statutory provision(s): Section 90(2) of the Income Tax Act, 1961, Article 19(2) of the India-USA Double Taxation Avoidance Agreement (DTAA)
Jeanne Lee cantrill v. DCIT, (ITAT)(Delhi Bench: "SMC" New Delhi) : Law Finder Doc Id # 2826206
