Treaty protection barred Indian taxation of Malaysian income from rubber estates under the India-Malaysia double tax agreement.

Income arising from rubber estates in Malaysia could not be included in the assessee's taxable income in India where the India-Malaysia double taxation avoidance agreement protected that income from Indian tax. The Madras HC followed its earlier decision on the same issue and held that Malaysian income was not assessable under the Income-tax Act, 1961, in view of the applicable treaty protection. The Revenue's contention was rejected.

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Issues: Whether income from Malaysia could be subjected to tax in India in view of the agreement for avoidance of double taxation between India and Malaysia.

Analysis: The question was covered by an earlier decision of the same court holding that income derived from rubber estates in Malaysia could not be included in the total income of the assessee and assessed to tax in India under the Income-tax Act, 1961, having regard to the India-Malaysia agreement for avoidance of double taxation. The court followed that and applied it to the same legal issue.

Conclusion: The question was answered in the affirmative and against the Revenue, holding that the Malaysian income could not be taxed in India.

Ratio Decidendi: Income arising in Malaysia could not be included in taxable income in India where the applicable double taxation avoidance agreement protected it from Indian tax.

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