2002 (7) TMI 78 - HC - Income Tax

Pension from Malaysia not taxable in India under Income-tax Act

The High Court of Madras upheld the Tribunal's decision that the pension received by the assessee from the Malaysian Government is not taxable in India ... Taxability of pension under Double Taxation Avoidance Agreement - Article 18(3) and 18(5) of the India-Malaysia Double Taxation Avoidance Agreement - treatment of pension paid by a statutory authority as pension from the Government - avoidance of double taxation - characterisation of pension vis-a -vis salary under domestic lawTaxability of pension under Double Taxation Avoidance Agreement - Article 18(3) and 18(5) of the India-Malaysia Double Taxation Avoidance Agreement - treatment of pension paid by a statutory authority as pension from the Government - avoidance of double taxation - Pension received by the assessee from the University of Malaysia is not assessable as salary in India under the Income-tax Act, 1961, having regard to the India-Malaysia DTAA. - HELD THAT: - The Tribunal correctly relied on articles 18(3) and 18(5) of the Agreement for Avoidance of Double Taxation between India and Malaysia to hold that the pension in question was taxable in Malaysia, the Contracting State, and therefore not taxable again in India so as to avoid double taxation. The University of Malaysia was rightly treated as a statutory authority falling within the term 'Government' for the purposes of the Agreement; accordingly the pension paid by that statutory authority is to be construed as a pension from the Government and taxable under the cited articles in Malaysia. There is no error in the Tribunal's conclusion that such pension cannot be subjected to taxation in India.Tribunal's order holding the pension not taxable in India is confirmed; question answered in favour of the assessee and against the Revenue.Final Conclusion: The High Court affirms the Tribunal's decision that the pension paid by the University of Malaysia is taxable in Malaysia under the India-Malaysia DTAA and is not assessable as salary in India; appeal dismissed and no costs. The High Court of Madras ruled that the pension received by the assessee from the Malaysian Government could not be assessed as salary under the Income-tax Act, 1961. The Tribunal held that the pension was not taxable in India due to a tax agreement with Malaysia, preventing double taxation. The court confirmed the Tribunal's decision in favor of the assessee.