Tribunal grants Double Income-Tax Relief in cross-border income case

The Tribunal allowed the appeals, ruling in favor of the assessee, and set aside the Commissioner of Income Tax's orders under section 263, restoring the Income Tax Officer's orders granting Double Income-Tax Relief for income taxed in both India and Nepal. The Tribunal emphasized the principle that relief should be granted if the same income has been taxed in two places, once in the hands of a firm and then in the hands of a partner, and held that the assessee was entitled to such relief.

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Issues:
1. Whether the assessee is entitled to Double Income-Tax Relief (DIT relief) for income taxed in both India and Nepal.

Analysis:
The judgment involved three appeals related to orders under section 263 passed for the same assessee. The appeals were heard together and disposed of in a common order for convenience. The assessee, a partner in a firm named J.K. Tubewells & Co., declared income by way of share in the firm, which included income from N.B. Tubewells & Co. in Nepal. The Income Tax Officer (ITO) passed orders under section 91 granting Double Income-Tax Relief. However, the Commissioner of Income Tax (CIT) canceled the ITO's orders, stating that the assessee had not paid income tax in Nepal. The dispute centered around whether the assessee had been assessed and paid tax in Nepal for the income in question.

The Tribunal considered the partnership deed and the assessments made in the case of the assessee under section 143. It was established that the income in question, included in the assessment of the assessee, had been taxed by the Nepal authorities as part of the income of N.B. Tubewells & Co. The Tribunal then analyzed whether the lack of individual assessment in Nepal should preclude DIT relief. The Tribunal referred to relevant instructions from Circular No. 6 of 1966, emphasizing the principle that relief should be granted if the same income has been taxed in two places, once in the hands of a firm and then in the hands of a partner.

The Tribunal rejected objections raised by the Department, noting that the instructions allowing concessions to taxpayers are binding on the authorities. Citing a decision of the Kerala High Court, the Tribunal held that the assessee was entitled to DIT relief for the years under consideration. The Tribunal also referenced a similar case involving another partner of the firm, where relief under section 91 was granted. Consequently, the Tribunal set aside the CIT's orders under section 263, restoring the ITO's orders under section 91. Ultimately, the Tribunal allowed the appeals, ruling in favor of the assessee.

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