2010 (8) TMI 761 - AT - Income Tax

Summary

Issues:
1. Failure to dispose of additional ground of appeal regarding taxability of income under section 9 of the Income-tax Act, 1961.

Analysis:
The Tribunal did not address an additional ground of appeal raised by the Appellant regarding the taxability of income under section 9 of the Income-tax Act, 1961. The Appellant argued that the income in the form of 'subscription revenue' was taxable due to business connection in India and the foregone consideration for subscription did not change the taxability. However, the Hon'ble Bombay High Court, relying on the Supreme Court's judgment in DIT v. Morgan Stanley & Co., held that no further profits could be attributed to the foreign enterprise in India under the India Singapore Double Taxation Avoidance Agreement. The High Court also referred to CBDT circular No. 23 to support this conclusion.

The High Court's decision overrode the Tribunal's order, stating that under the provisions of the India Singapore DTAA, the Appellant had no tax liability, thus rendering the issue raised by the Revenue irrelevant under domestic law. As the Tribunal's order merged with the High Court's decision, the Tribunal was deemed powerless to modify the ruling. The Tribunal rejected the Assessing Officer's miscellaneous application, concluding that they could not alter the decision already adjudicated by the High Court in appellate jurisdiction.

Therefore, the Tribunal dismissed the miscellaneous application, upholding the High Court's ruling and determining that the Appellant had no tax liability under the India Singapore DTAA, as per the decision in DIT v. Morgan Stanley & Co. The Tribunal's inability to modify the order due to the High Court's jurisdictional decision led to the rejection of the Revenue's claim, solidifying the Appellant's position regarding taxability of income in India.