Treaty-based tax deduction claim under the India-USA agreement may be remitted for fresh consideration when never examined below.

A treaty-based claim under Section 90 of the Income-tax Act, read with the India-USA Double Taxation Avoidance Agreement, was not examined by the Assessing Officer, CIT(A) or the Tribunal. Because the record contained no finding on whether the non-resident payments qualified for treaty protection, including the Article 12 "make available" requirement, the appellate court declined to decide the disallowance issue on merits under Section 40(a)(ia). The proper course was to leave the treaty objection open and remit the matter to the Assessing Officer for fresh consideration after giving the assessee an opportunity to raise the claim in accordance with law.

---

---

Issues: Whether the assessee's claim under Section 90 of the Income-tax Act, 1961 read with the India-USA Double Taxation Avoidance Agreement, though not raised before the lower authorities, could be examined in the appeal and whether the matter required remand for consideration of the tax deduction disallowance.

Analysis: The question whether the payments to the non-resident fell within the treaty protection and whether the assessee could rely on the "make available" requirement under Article 12 was not examined by the Assessing Officer, the Commissioner of Income-tax (Appeals), or the Tribunal. In the absence of any finding on the treaty issue in the orders under challenge, the Court declined to decide the merits of the disallowance under Section 40(a)(ia) on the basis of Section 90 at the appellate stage. The proper course was to permit the assessee to place the treaty claim before the Assessing Officer, who would consider the contention after giving due opportunity and decide it in accordance with law.

Conclusion: The treaty-based objection was left open and the matter was remitted to the Assessing Officer for fresh consideration of the assessee's claim under Section 90 and the India-USA Double Taxation Avoidance Agreement.

Ratio Decidendi: Where a treaty-based claim affecting tax deduction liability was not examined by the lower authorities, the appellate court may leave the issue open and remit it for adjudication by the Assessing Officer in accordance with law.

---