2000 (12) TMI 55

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....correct in law in holding that the capital gain arising from the sale of capital assets in Pakistan was not taxable in India irrespective of the fact whether it was subjected to tax in Pakistan or not for the assessment year 1966-67?" The factual position as indicated in the statement of case is as follows: The assessee, i.e., State Bank of India, was the successor to National Bank of Lahore Ltd. (hereinafter referred to as the "Lahore Bank"). For the assessment year 1966-67, the Income-tax Officer levied tax of Rs. 2,51,197 in respect of certain properties sold in Pakistan holding them taxable under the head "Capital gains". The assessee's case was that income from capital gains in respect of sale of the properties in Pakistan was li....

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....nbsp;                    (2)                   (3)                    (4) 6. Capital gains:  (a) From sale, exchange or    100 per cent. by the   Nil by the other.        transfer of an immovable  dominion in        capital asset and any     which the capital        rights pertaining there   asset i....

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.... tax under the heading "Capital gains" in Pakistan. The dominion of India and the dominion of Pakistan concluded an agreement for the "Avoidance of Double Taxation of Income" chargeable under the two dominions in accordance with their respective laws, and in exercise of powers conferred by section 49AA of the Indian Income-tax Act, 1922 (hereinafter referred to as the "old Act") and corresponding provisions of the Excess Profits Tax Act, 1940 and the Business Profits Tax Act, 1947. A notification was issued on December 10, 1947 whereby the Government of India directed that the provisions of the agreement would be given effect to in the dominion of India. Relevant articles are articles IV, V and VI. They read as follows: "Article IV : ....

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....s discretion) the collection of a portion of the demand equal to the estimated abatement. If the assessee produces a certificate of assessment in the other dominion within the period of one year or any longer period allowed by the Income-tax Officer, the uncollected portion of the demand will be adjusted against the abatement allowable under this agreement; if no such certificate is produced, the abatement shall cease to be operative and the outstanding demand shall be collected forthwith." The scope and ambit of articles IV, V and VI came up for consideration of the apex court in CIT v. Mahalaxmi Sugar Mills Co. Ltd. [1986] 160 ITR 920. It was, inter alia, observed that for the purposes of assessment under the relevant statute the incom....