Treaty relief for Malaysian immovable property income confirmed where taxing rights belong to Malaysia under the India-Malaysia tax pact

Income arising from immovable property situated in Malaysia is taxable in Malaysia under article 6 of the India-Malaysia double taxation agreement, so it is excluded from the assessee's total income in India. The treaty allocation of taxing rights to the state where the property is situated was treated as sufficient for exclusion, and production of a certificate evidencing actual tax payment in Malaysia was not a precondition for denying the exemption claim. Article 22 did not change that position on the facts considered.

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Issues: Whether income arising from immovable property situated in Malaysia was taxable in Malaysia and, therefore, required to be excluded from the assessee's total income in India.

Analysis: The income in dispute arose from immovable property situated in Malaysia. Under article 6 of the India-Malaysia double taxation agreement, income from such property may be taxed in the contracting state where the property is situated. The requirement of producing a certificate showing actual tax payment in Malaysia was held not to be a condition for denial of exclusion where the treaty itself allocated taxing power to Malaysia. Article 22 did not alter that position on the facts found.

Conclusion: The income from the immovable property in Malaysia was held to be excluded from the assessee's total income.

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