India-Malaysia DTAA relief applies without proof of Malaysian assessment for treaty-covered income.

Under the India-Malaysia DTAA, income accruing in Malaysia to an Indian resident from rubber estates, dividends, interest and capital gains on immovable property was held entitled to relief in India on the treaty framework itself. The Court applied its earlier construction of the relevant treaty articles governing property income, business income, dividends, interest and capital gains, and rejected the view that separate proof of assessment by Malaysian tax authorities was necessary. Relief was therefore available without showing that Malaysia had taxed the income, and the reference was answered in favour of the assessee.

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Issues: Whether, under the India-Malaysia double taxation avoidance agreement, income accruing in Malaysia to an Indian resident from rubber estates, dividends, interest and capital gains on immovable property was entitled to full relief in India, and whether proof of assessment by Malaysian tax authorities was a condition for such relief.

Analysis: The questions turned on the construction of the agreement and its allocation of taxing rights and relief mechanism. The Court followed its earlier decision on the same treaty, which had already construed the relevant articles governing income from property, business income, dividends, interest and capital gains. On that footing, the availability of relief did not depend on production of evidence that the Malaysian authorities had separately assessed the income. The treaty provisions were treated as conferring the relief claimed in India on the basis of the agreement itself.

Conclusion: The reference was answered in favour of the assessee and against the Revenue.

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