1994 (6) TMI 50 - AT - Income Tax

Summary

Issues Involved:
1. Maintainability of appeals under section 143(1).
2. Taxability of pension received from the Government of Great Britain under the Double Taxation Avoidance Agreement (DTAA).

Issue-wise Detailed Analysis:

1. Maintainability of Appeals under Section 143(1):
The primary issue addressed was whether appeals against assessment orders made under section 143(1) are maintainable. The Deputy Commissioner of Income Tax (Appeals) dismissed the appeals on the ground that the assessments were made under section 143(1), accepting the income returned, and thus, the appeals were not maintainable. The assessee contended that the appeals were maintainable under section 246(1)(c) [246(1)(a) from 1-4-1989], which allows appeals where the assessee denies liability to be assessed under the Income Tax Act. The Tribunal agreed with the assessee, noting that the words "an order against the assessee where the assessee denies his liability to be assessed under this Act" do not specify whether such an order is passed under section 143(3) or section 143(1). Therefore, the Tribunal concluded that the appeals were maintainable under section 246(1)(c).

2. Taxability of Pension Received from the Government of Great Britain under the DTAA:
The second issue was whether the pension received by the assessee from the Government of Great Britain was taxable in India. The assessee argued that under article 19(3) of the Convention for Avoidance of Double Taxation and Prevention of Fiscal Evasion between the Government of India and the Government of Great Britain, any pension paid by the Government of a Contracting State to an individual in respect of services rendered to that Government shall be taxable only in that Contracting State. The Tribunal agreed with the assessee, stating that the pension received from Great Britain was not taxable in India. The Tribunal noted that the Assessing Officer was duty-bound to apply the correct principle of law for taxation and should have exempted the income in view of the Convention. Consequently, the assessments made by the Assessing Officer for the years under consideration were set aside, and the tax collected from the assessee was required to be refunded.

In conclusion, the Tribunal held that the appeals filed by the assessee were maintainable under section 246(1)(c) and that the pension received from the Government of Great Britain was not taxable in India. The orders of the Deputy Commissioner of Income Tax (Appeals) were modified, and the appeals were allowed.