TaxTMI 
TaxTMI 
2020 (2) TMI 1400
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....me taxable in India as well i.e. the residence jurisdiction. The related grounds of appeal are being reproduced below for ready reference: On the facts and in the circumstances of the case and in law, the learned AO/learned TPO/Hon'ble DRP 1. erred in not reducing the income earned by the appellant's branch offices located in the United Arab Emirates (UAE) and Qatar, [amounting to Rs. 11,91,18,391] from the appellant's total income chargeable to tax in India, as per Article 7 of the Double Taxation Avoidance Agreements between India and UAE/Qatar whereby only the UAE and Qatar Governments are entitled to levy tax on such income. 2. erred in not examining the taxability of income earned by appellant's branch offices located in UAE and Qatar 3. When this appeal was taken up for hearing, learned counsel for the assessee invited our attention to the fact that this aspect of the matter has not been examined, on merits, by the authorities below and the claim has been simply rejected on the ground of certain technicalities. These technical objections, as submitted by the learned counsel, are not sustainable in law. It was in this backdrop that....
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....udicial precedents in the cases of PAVL Kulandagan Chettiar [3 ITD 426 (SB)], which has been upheld right upto Hon'ble Supreme Court (267 ITR 654) and a review petition has also been dismissed by Hon'ble Supreme Court (300 ITR 5), CIT Vs. Bank of India [64 taxmann.com 335 (Bom)], CIT Vs. VRSRM Firm (208 ITR 401), CIT Vs. R.M. Muthiah [202 ITR 508 (Karnataka)], DCIT Vs. Patni Computer Systems Ltd. [114 ITD 159 (Pune)], Apollo Hospitals Enterprises Limited [53 SOT 103 (Chennai)], DCIT Vs. Turquoise Investments & Finance Ltd. (300 ITR 1), Pooja Bhatt Vs. DCIT (26 SOT 574), DCIT Vs. Mideast India Ltd. [28 SOT 395 (Del)], CIT Vs. Patni Computer Systems Limited (ITA No. 1148 of 2012; Hon'ble Bombay High Court) and Apollo Enterprises Limited DCIT [23 taxmann.com 168 (Chennai-Tribunal)]. 5. Learned counsel for the assessee has more armoury in store. He begins by inviting our attention to a coordinate bench decision in the case of Bank of India Vs. DCIT, and vice versa (ITA Nos. 5977 and 6016/Mum/2011; order dated 26th July 2017) wherein it has been held that the income of the foreign branches, covered by tax treaties with respective jurisdictions, is to be excluded from tota....
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....d by the Dispute Resolution Panel, for example for the assessment year 2013-14 (at page 294 of the paper book, and internal page 15 of the respective order), is as follows: 9.1 We have gone through the core objection raised with respect to inclusion of foreign branches income in the hands of the assessee. It is a fact that the assessee has two foreign branches situated in UAE and Bahrain. It is also a fact that there exists a DTAA between India and UAE. Reference is made to the decision of Hon'ble Supreme Court in PAVL Kulandagan Chettiar's case (267 ITR 654) wherein Hon'ble Court has upheld the finding of the High Court which took the view that where there exists a provision to the contrary in the agreement, there is no scope for applying the law of any one of the respective contracting stares to tax paid on the liability to tax has to work doubt (sic-out) in the manner and to the extent permitted and allowed under the terms of the agreement. The AO is directed to verify the total income of the UAE branch and reduce the same from assessee's total income. The ground of objection is, accordingly, accepted. 9.2 Similar views have been taken in the as....
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.... taxable in India. A double dip of losses abroad, howsoever inappropriate on the first principles, was actually possible, and was approved by the coordinate benches of this Tribunal, as in the case of Patni Computers (supra), wherein speaking through one of us (i.e. the Vice President), the legal position was respectfully followed nevertheless and it was also observed thus: The law laid down by the Hon'ble Supreme Court in binding on us under Article 141 of the Constitution of India. The prevailing legal position, therefore, is that once an income is held to be taxable in a tax jurisdiction under a double taxation avoidance agreement, and unless there is a specific mention that it can also be taxed in the other tax jurisdiction, the other tax jurisdiction is denuded of its powers to tax the same. To that extent, the worldwide basis of taxation in the scheme of the Indian Income-tax Act is no longer applicable in a situation provisions of a double taxation avoidance agreement entered into under section 90 apply. The law laid down by the Hon'ble Supreme Court in binding on us under Article 141 of the Constitution of India. The prevailing legal position, therefore, is....
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....tax Act, 1961 (43 of 1961), and relief shall be granted in accordance with the method for elimination or avoidance of double taxation provided in such agreement". A coordinate bench of this Tribunal, in the case of Essar Oil Ltd. Vs. ACIT [(2013) 28 ITR (Trib.) 609 (Mumbai)], also proceeded to hold that this notification was retrospective in effect inasmuch as it applied with effect from 1st April 2004 i.e. the date on which sub-section 3 was introduced in Section 90. 12. When we invited learned counsel's attention to these legal developments, he submitted that as Section 90 has now been redrafted and a new Section 90 is in place, with effect from 1st October 2009, the notification issued under old section 90(3) ceases to be relevant. The legal position is, as he contended, that as on now there is no notification is in force under the present section 90, and, therefore, Hon'ble Supreme Court's judgment in the case of Kulandagan Chettiar (supra) still holds good in law. In support of this proposition, learned counsel for the assessee relies upon an observation by the coordinate bench, in the case of Essar Oil Ltd. (supra) to the effect that "We are, therefore, of the ....
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....t was faced with an omission and re-enactment of two Sections of the Income Tax Act. This Court found that Section 24 of the General Clauses Act would apply to such omission and re-enactment. The Court has stated as follows: "As noticed earlier, the omission of Section 2(27) and re-enactment of Section 80-JJ was done simultaneously. It is a very well-recognized rule of interpretation of statutes that where a provision of an Act is omitted by an Act and the said Act simultaneously re-enacts a new provision which substantially covers the field occupied by the repealed provision with certain modification, in that event such re-enactment is regarded having force continuously and the modification or changes are treated as amendment coming into force with effect from the date of enforcement of the re-enacted provision. Viewed in this background, the effect of the re-enacted provision of Section 80-JJ was that profit from the business of livestock and poultry which enjoyed total exemption under Section 10(27) of the Act from Assessment Years 1964-65 to 1975-76 became partially exempt by way of deduction on fulfillment of certain conditions." (At para 12) 35. For all the ....
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....judicial precedents cited by the learned counsel. 16. None of these judicial precedents take into account the developments with respect to the provisions of Section 90(3) and the notification issued there under. The only exception is a coordinate bench decision in the case of Bank of India (supra) wherein the issue of notification was specifically raised but then the coordinate bench, following Hon'ble jurisdictional High Court's judgment in assessee's own case for the assessment year 2003-04 and without realizing that the amendment in law was effective 1st April 2004 i.e. assessment year 2004-05, decided the issue in favour of the assessee. The impact of amendment with effect from 1st April 2004 not having been noted or having been brought to the notice of the coordinate bench, this decision is clearly per incuriam and, as such, not a binding judicial precedent. As a matter of fact, when subsequent assessment years of this very assessee came up for consideration of another bench, the said precedent was not followed and, vide order dated 30th November 2018, it was observed that "the decision of the Hon'ble High Court in assessee's own case pertained to the as....
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....udication. 17. We have also noted that, as per details furnished before us at pages 327 to 376 of the paper-book, the Assessing Officer has accepted the claim of the assessee, in the assessment year 2016-17, for exclusion of Rs. 56,39,11,560 from its taxable income on the ground that it pertains to the profits of its branches in Italy, UAE, Qatar and Saudi Arab and India has DTAAs with these countries. This decision by the Assessing Officer, whatever its merits, certainly does not constitute any estoppel against the statute, and, in any case, there is no res judicata in the income tax proceedings. Just because the Assessing Officer himself has allowed a relief to the assessee, which, in our humble understanding of law-whatever is its worth, is patently inadmissible in law, we are not obliged to give the assessee the same relief. If at all the stand of the Assessing Officer indicates or explains anything, it explains the anxiety of the assessee to go back to the assessment stage on this issue. We are, however, not inclined to follow the plan so laid out. 18. In the light of the above discussions, as also bearing in mind entirety of the case, we reject the claim of the assessee....