Treaty classification under a specific clause prevails over the residuary clause for interest-linked income brought into Pakistan.

Income derived from money lent at interest and brought into Pakistan for the purposes of managed companies fell within the specific scope of clause 5(f) of the India and Pakistan Avoidance of Double Taxation Agreement. Clause 9 was only a residuary provision and could not displace a case expressly covered by clause 5(f). The Supreme Court affirmed the High Court's view, so the receipt was treated under the specific treaty provision and the answer was against the Revenue and in favour of the assessee.

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Issues: Whether the sum of Rs. 1 lakh was taxable under clause 5(f) of the Schedule to article IV of the India and Pakistan Avoidance of Double Taxation Agreement, or fell within the residuary clause 9.

Analysis: The receipt was held to arise from money lent at interest and brought into Pakistan for the purposes of the managed companies there. On those facts, the specific provision in clause 5(f) applied. Clause 9 operated only as a residuary provision and could not govern a case covered by clause 5(f).

Conclusion: The amount was covered by clause 5(f) and not by clause 9, with the result that the answer was against the Revenue and in favour of the assessee.

Final Conclusion: The Supreme Court affirmed the High Court's view on the applicable treaty clause and left the assessee entitled to the beneficial treatment under the specific provision.

Ratio Decidendi: Where a treaty specifically covers income derived from money lent at interest and brought into the other Dominion, the residuary clause cannot be invoked to displace that specific classification.

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