TaxTMI 
TaxTMI 
1997 (3) TMI 164
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....ee by letter dt. 19th Sept., 1996, replied that his passport was lost in Changi airport, Singapore, on 18th Oct., 1995, and the same was reported to the Singapore police authorities on 20th Oct., 1995. He filed a copy of the complaint given to the Singapore police authorities. He filed the following documents to support his claim that he is a 'non-resident' and also to prove that he had sufficient income at Singapore: (i) Certificate from Rama & Co., certified Public Accountants, to the effect that the assessee has been assessed to tax in Singapore for the last 20 years in the status of "resident" at Singapore. (ii) The assessee had stated that being a "Resident" in Singapore, he has to be physically present for more than 183 days in Singapore. He has filed an extract from Singapore taxation. (iii) He filed a copy of the I.D. card from Singapore with the claim that it will be issued only to permanent residents at Singapore. (iv) Copies of assessment orders for the asst. yrs. 1986 to 1996 showing the incomes assessed in Singapore Dollars were filed. (v) He claimed that he was running a restaurant called "Muthu Restaurant" till July, 1994 and that in the year 1994 he sold the re....
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....reign Exchange etc. Act of 1991. The assessee's status is not "resident and ordinarily resident" and further the remittance has not been supported by the declaration before the banker to whom such remittance was claimed to have been made. In these circumstances the assessee's claim for immunity is not acceptable for such remittance. 12. The other nature of remittances of transfer of funds from foreign branch at Singapore to Indian branch through the Bank and as these remittances are well within the available taxed funds at Singapore which could be available for remittances after other probable outgoings, credit is given to the limited extent of amounts transferred from bank-to-bank. 13. Complete break-up of remittance claimed on account of demand draft and transfer remittances as well as total remittances claimed are given in Annexure - IV(i) and Annexure-IV(ii). 14. Out of total remittances claimed credit is being given only to the extent of Rs. 1,55,02,600, as below, being the remittances received on transfer and no credit is being given for the amount received by way of demand drafts: Bank-to-bank Remittances: . Rs. Remittances received upto 23rd July, 1994 48,50,000 Re....
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....ook No. I shows the certificate of Rama & Co., certified Public Accountants, Singapore, dt. 23rd Sept., 1996. In that they have certified that the assessee was holding Singapore permanent resident status for more than 20 years and that based on his stay in Singapore, the local tax authorities treated the assessee as a resident for tax purposes and assessed accordingly. The assessed incomes in Singapore Dollars for the asst. yrs. 1986 to 1996 were given. The assessment orders are given from pp. 27 to 47 of the paper-book No. I. From the notice of assessment for the asst. yr. 1985 it will be seen that personal reliefs were granted by the IT Department, Singapore, to the assessee. Such personal reliefs are allowable only to the residents. At p. 70 of the paper-book No. I an extract is given from p. 250 of Singapore Taxation laws to substantiate the assertion that personal reliefs are given only to the residents. In the assessment order the AO has taken the assessee's status as "non-resident" for the asst. yrs. 1986-87 to 1992-93 and as "Resident but not ordinarily resident" for the asst. yrs. 1993-94 to 1996-97. Sec. 5(1) of the IT Act, 1961 lays down the scope of total income of "res....
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....as given the details of the DDs/TTs issued by UCO Bank, Serangoon branch, Singapore, which were credited in the names of the assessee and his family members. Even on 19th Aug., 1987, long before the search on 21st Sept., 1995, the IT Department has accepted the drafts originating from UCO Bank, Serangoon Branch, Singapore. Item Nos. 8, 9, 10 and 11 in the receipt given at p. 64 of paper-book No. I issued by the Chief CIT, Madras, can be noted. The said amount comes to Rs. 20,65,500. The assessee need not prove that the amounts covered by the demand drafts was subjected to tax in Singapore. Suffice to say that the demand drafts originated from Singapore. Assessee proved that the demand drafts originated from Singapore. The source for the said demand drafts need not be proved. Please refer to the judgment of the Hon'ble Madras High Court in the case of S. Hastimal vs. CIT (1963) 49 ITR 273 (Mad). In the present case, the AO asked for explanation for credits in the bank accounts of the assessee. The assessee proved the origin and the source the demand drafts and bank transfers which were credited in the bank accounts. The Hon'ble Madras High Court held that after the lapse of ten year....
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....etween the Govt. of Republic of India and the Govt. of Republic of Singapore for the avoidance of double taxation vide Notification dt. 8th Aug., 1994 at pp. 104 to 120 of paper-book No. III. The Hon'ble Calcutta High Court in the case of CIT vs. Davy Ashmore India Ltd. (1991) 190 ITR 626 (Cal) held that the double taxation avoidance agreement must prevail over the provisions of the IT Act. The judgment of the Hon'ble Madras High Court in the case of CIT vs. VR. S.R.M. Firm (1994) 120 CTR (Mad) 427 : (1994) 208 ITR 400 (Mad) and the Hon'ble Calcutta High Court in the case of CIT vs. Hindustan Paper Corpn. Ltd. (1994) 77 Taxman 450 (Cal) are to the same effect. Sec. 9(2) was inserted by the Finance (No. 2) Act, 1991 with retrospective effect from 1st April, 1972. The s. 90(2) envisages a situation where the Central Govt. has entered into an agreement with the Government of any country outside India under s. 90(1) for granting relief of tax, or as the case may be, avoidance of double taxation. In such a situation, in relation to the assessee to whom such agreement applies, the provisions of the IT Act, 1961, shall apply to the extent they are more beneficial to that assessee. Hence t....
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....of capital receipt or revenue receipt. Hence the case of Keshav Mills Ltd. is distinguishable on facts. Double taxation avoidance agreement will come into picture when there is a dispute between the two countries for purposes of taxation. The Singapore Govt. has not taxed this disputed income (agitated by the assessee now in appeal). Hence the case of CIT vs. Davy Ashmore India Ltd. does not apply. The case of CIT vs. VR. S.R.M. Firm is also distinguishable. 10. In reply, the assessee's counsel stated to the following effect : the legal representative of the assessee conclusively established that the demand drafts originated in Singapore. The deceased assessee was having a lucrative business there. It is not for the Revenue to call upon the assessee to prove whether the remittances were taxed in Singapore, because of the territorial limits. Money has been remitted through authorised channels. The business was controlled in Singapore. Dead man's explanation is now being sought. To the extent possible his legal heir explained. As per s. 5 remittances can only be taxed if they are in the form of income only. 11. We have considered the rival submissions, case law cited and perused th....
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....n purchased has not been explained properly. It could as well have emanated from the source in India and brought by way of such drafts. Since the assessee has failed in his onus to prove the source from which such demand drafts have been purchased, no credit can be given. (v) Any asset acquired in India has to be explained with reference to known source, the investments/deposits in India will have to be treated as unexplained investment and deposit, which has to be treated as deemed income under ss. 69, 69A and 69B of the Act. Therefore, all the remittances cannot be treated as coming out of source outside India to explain acquisition of asset in India. 13. The AO has mentioned that the demand drafts transmitted from Singapore have to be treated as unexplained investments and deposits which have to be treated as deemed income under ss. 69, 69A and 69B of the IT Act, 1961. This kind of omnibus statement is not permitted. He should have pinpointed the particular section--Sec. 69 or s. 69A or s. 69B--and given his detailed reasons as to how the remittances from Singapore by way of demand drafts can be brought under any of those sections. The AO treated these remittances from Singapo....
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.... as income but later transmitted to India. Hence it will not be received as income in India. For this proposition reliance is made on the judgment of the Supreme Court in the case of Keshav Mills Ltd. vs. CIT. Income cannot be received twice. Receipt by itself is not sufficient to attract tax; it is only receipt as "income" which can attract tax (CIT vs. Agarwal & Co. Every receipt by the assessee is not necessarily income in his hands. It is only when it bears the character of income at the time when it reaches the hands of the assessee that it becomes exigible to tax (CIT vs. Tollygunge Club Ltd. The onus to prove that the amount received represented a revenue receipt is on the IT Department, as held by the Punjab & Haryana High Court in the case of Baghapurana Co-operative Marketing Society Ltd. vs. CIT (1989) 79 CTR (P&H) 168 : (1989) 178 ITR 653 (P&H), which followed the judgment of the Hon'ble Supreme Court in the case of Bombay Steam Navigation Co. (1953) (P) Ltd. vs. CIT (1965) 56 ITR 52 (SC). In the present case, the Department failed to discharge the onus placed on it. 15. The AO is not at all justified in stating that the assessee has failed in his onus to prove the sou....