TaxTMI 
TaxTMI 
2004 (11) TMI 40
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....eign employer was liable to be included in the total income of the assessee? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee was not entitled to relief under article XIV of the Convention for the Avoidance of Double Taxation between India and Austria?" The assessee-applicant was a foreign technician under the employment of M/s. Vereinigte Osterreichische Eiseh, a foreign company. The assessee was deputed for rendering technical services/on-spot clarification to M/s. Gujarat State Fertilisers Co. Ltd. (GSFC) under the terms of the agreement between GSFC and M/s. Voest Alpine. As per the terms of the appointment, the assessee was to be paid "retention remune....
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....d the assessment order by stating that no interference was called for. The assessee along with other similarly situated assessees preferred appeal before the Income-tax Appellate Tribunal. The Tribunal for the reasons stated in its consolidated order dated May 28, 1980, upheld the orders of the authorities below. According to the Tribunal, all the conditions in clause (2) of article XIV of the Double Taxation Agreement had to be satisfied as the conditions were cumulative, and before this country gave up its right to tax the income earned in India, it had to be satisfied that the assessee was liable to pay tax in respect of that income in Austria. Mr. J.P. Shah, the learned advocate appearing on behalf of the assessee-applicant, contended....
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....court in the case of Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 and CIT v. P. V. A. L. Kulandagan Chettiar [2004] 267 ITR 654 in support of the submission that wherever there is a conflict between the provisions of the Act and the Double Taxation Agreement, the terms of the agreement would prevail over the provisions of the Act, and further that the agreement being in the nature of a document providing for relief against taxation, beneficial reading of the terms of the agreement was required. As against that, Mr. Pranav Raval for Mr. D. D. Vyas, senior advocate, and Mrs. M. M. Bhatt appearing on behalf of the Revenue, submitted that the conditions prescribed under clause (2) of article XIV were cumulative in nature and even ....
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....or or on behalf of a resident of Austria. (c) the profits or remuneration are subject to Austrian tax, and (d) the profits or remuneration are not deducted in computing the profits of an enterprise chargeable to Indian tax." On a plain reading, clause (1) provides that profits or remuneration from professional services or from services as an employee derived by an individual who is resident of Austria may be taxed in India only if such services are rendered in India. It is an admitted position before the authorities that the assessee, a resident of Austria has rendered services in India and thus, the authorities would be entitled to seek to fasten charge of tax under the Act qua the remuneration received for such services. However, clau....
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....ITR 706, wherein, in an almost similar situation, it was stated, "in our view, the contention of the respondents proceeds on the fallacious premise that liability to taxation is the same as payment of tax. Liability to tax is a legal situation; payment of tax is a fiscal fact." The court further takes into consideration the Model Tax Convention of 1992 and reproduces article 4.1 which reads as under: "'It seems clear that a person does not have to be actually paying tax to be "liable to tax"-otherwise a person who had deductible losses or allowances, which reduced his tax bill to zero would find himself unable to enjoy the benefits of the convention. It also seems clear that a person who would otherwise be subject to comprehensive taxing b....