Tribunal upholds tax inclusion for UAE & Qatar income, rejects DTAA arguments, directs factual verifications.

The Tribunal dismissed the appeal, upholding the inclusion of income earned by the appellant's branches in UAE and Qatar in the total income chargeable to tax in India. The Tribunal rejected the appellant's arguments based on Double Taxation Avoidance Agreements and legal precedents, emphasizing the legislative developments under Notification No. 91/2008. Additionally, the Tribunal directed the Assessing Officer to address factual verifications related to tax credits and foreign tax reliefs, declining to interfere in the matter at that stage.

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Issues Involved:
1. Exclusion of income earned by the appellant's branch offices in UAE and Qatar from total income chargeable to tax in India.
2. Examination of the taxability of income earned by appellant's branch offices in UAE and Qatar.
3. Tax credits, foreign tax reliefs, and tax deduction at source credits being partly declined.

Detailed Analysis:

Issue 1: Exclusion of Income Earned by Branch Offices in UAE and Qatar
- Core Grievance: The appellant argued that the income earned by its branches in UAE and Qatar, amounting to Rs. 11,91,18,391, should be excluded from the total income chargeable to tax in India as per Article 7 of the Double Taxation Avoidance Agreements (DTAAs) between India and UAE/Qatar. The appellant contended that such income is taxable only in the source jurisdiction (UAE and Qatar) and should not be taxed again in India.
- Tribunal's Stand: The Tribunal noted that the claim was previously rejected on technical grounds without examining the merits. The Tribunal decided to adjudicate the issue on merits.
- Legal Precedents Cited: The appellant relied on several judicial precedents, including the case of PAVL Kulandagan Chettiar, which held that income taxable in the source jurisdiction under a tax treaty cannot be taxed again in the residence jurisdiction unless specifically mentioned.
- Notification No. 91/2008: The Tribunal highlighted that the legislative developments, specifically the notification issued under Section 90(3) of the Income Tax Act, 1961, overruled the Supreme Court's judgment in Kulandagan Chettiar's case. The notification clarified that income taxable in the treaty partner jurisdiction should still be included in the total income chargeable to tax in India, with relief granted as per the DTAA.
- Conclusion: The Tribunal rejected the appellant's claim on merits, stating that the income earned by the branches in UAE and Qatar should be included in the total income chargeable to tax in India, as per the notification under Section 90(3).

Issue 2: Examination of the Taxability of Income Earned by Branch Offices in UAE and Qatar
- Appellant's Request: The appellant requested the Tribunal to remit the matter to the Assessing Officer for examination on merits.
- Tribunal's Response: The Tribunal declined this request, emphasizing that the matter should be adjudicated on merits at the Tribunal level.
- Legal Position: The Tribunal reiterated that the notification under Section 90(3) and the legislative amendments overruled the previous legal position established by the Supreme Court in Kulandagan Chettiar's case.
- Conclusion: The Tribunal held that the income earned by the appellant's branches in UAE and Qatar is taxable in India, as per the notification under Section 90(3), and rejected the appellant's request to remit the matter to the Assessing Officer.

Issue 3: Tax Credits, Foreign Tax Reliefs, and Tax Deduction at Source Credits
- Appellant's Grievance: The appellant was aggrieved by the partial denial of certain tax credits, foreign tax reliefs, and tax deduction at source credits.
- Tribunal's Observation: The Tribunal noted that these issues were due to factual verifications and that the appellant had taken up the matter with the concerned authorities for rectification.
- Conclusion: The Tribunal directed the Assessing Officer to deal with the rectifications in accordance with the law and declined to interfere in the matter at this stage.

Final Judgment:
The appeal was dismissed, with the Tribunal upholding the inclusion of income earned by the appellant's branches in UAE and Qatar in the total income chargeable to tax in India and directing the Assessing Officer to address the factual verifications related to tax credits and foreign tax reliefs. The judgment was pronounced in the open court on February 14, 2020.

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