Treaty relief and section 14A: OMIFCO-Oman dividend excluded from disallowance because it was not exempt income.

Dividend received from the overseas joint venture OMIFCO-Oman was chargeable to tax in India in principle, but treaty relief under section 90 of the Income-tax Act, 1961 applied under the Indo-Oman arrangement. Following its earlier view in the assessee's own case, the ITAT Delhi held that the dividend did not constitute exempt income for section 14A purposes. The exclusion of that dividend from the section 14A disallowance computation was therefore proper, and the Revenue's challenge failed.

---

---

Issues: Whether dividend income received from the overseas joint venture OMIFCO-Oman could be treated as exempt income for the purposes of disallowance under section 14A of the Income-tax Act, 1961 and excluded from the computation of such disallowance.

Analysis: The dividend from OMIFCO-Oman was held to be chargeable to tax in India in principle, but the assessee was entitled to relief under section 90 of the Income-tax Act, 1961 under the Indo-Oman treaty arrangement. Following the Tribunal's earlier view in the assessee's own case, the dividend was treated as not constituting exempt income for section 14A purposes. On that basis, the exclusion of OMIFCO-Oman dividend from the section 14A computation was found proper.

Conclusion: The exclusion of the OMIFCO-Oman dividend from the section 14A disallowance was and the Revenue's challenge failed.

---