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2009 (5) TMI 560 - AT - Income TaxCondonation of delay - There is an acknowledgment also by way of seal of M/s Mustafa Gold Mart, Chennai-17, but the learned counsel of the assessee has sought to raise a doubt that the receiver is a person other than the assessee - In the interest of substantial justice, the delay in filing the appeal is liable to be condoned and the same is condoned as such In this case the assessee was granted deduction under s. 80HHC amounting to28,98,489 - Assessee being a non-resident was not eligible for deduction under s. 80HHC - The learned counsel of the assessee, argued that in the preceding two years assessee has been granted deduction under s. 80HHC of the IT Act - A reading of the case nowhere reflects that AO has applied his mind for the deduction under s. 80HHC in the context of assessee being a non-resident with reference to s. 90(2) of the IT Act along with the DTAA between India and Singapore Hence, the contention of the learned counsel of the assessee that two views were possible on this issue and one view has been adopted by the AO is not sustainable. The AO s order does not reflect proper application of mind. Hence, it cannot be said that he was taking one of the possible views. - Appeal is dismissed - Order of CIT u/s 263 sustained.
Issues Involved:
1. Delay in filing the appeal. 2. Eligibility for deduction under Section 80HHC of the IT Act for a non-resident. 3. Application of the Double Taxation Avoidance Agreement (DTAA) between India and Singapore. 4. Binding nature of the ruling by the Authority for Advance Rulings (AAR). Detailed Analysis: 1. Delay in Filing the Appeal: The appeal by the assessee was delayed by 88 days. The assessee, a permanent resident of Singapore, claimed unawareness of the order's service due to his absence from Chennai. The Departmental Representative confirmed the order was served and acknowledged on 19th March 2008. The acknowledgment bore a different signature, suggesting another person received it. Considering these circumstances, the tribunal condoned the delay in the interest of substantial justice. 2. Eligibility for Deduction under Section 80HHC: The assessee, a non-resident, was initially granted a deduction under Section 80HHC amounting to Rs. 28,98,489. The CIT invoked Section 263, arguing that the assessee, being a non-resident, was ineligible for this deduction. The CIT directed the AO to withdraw the deduction and recompute the total income. The assessee argued that deductions were granted in previous years and cited Article 26 of the DTAA, which prohibits discrimination based on nationality. 3. Application of DTAA between India and Singapore: The assessee's counsel argued that as per Section 90(2) of the IT Act, DTAA provisions take precedence over the IT Act. They cited case laws supporting this view. The Departmental Representative countered that Section 80HHC explicitly excludes non-residents from eligibility. He also referred to Clause (4)(a) of Article 26 of the DTAA, which allows Contracting States to deny non-residents certain deductions granted to residents. The tribunal agreed with this interpretation, stating that the non-discrimination clause does not oblige India to grant such deductions to non-residents. 4. Binding Nature of the AAR Ruling: The Departmental Representative referenced an AAR ruling in the assessee's case, which held that income from foreign operations related to the purchase of goods in India for export cannot be exempt from Indian taxation. Section 245S of the IT Act makes this ruling binding on the assessee. The tribunal upheld this view, dismissing the assessee's grounds against the taxability of such income in India. Conclusion: The tribunal dismissed the appeal, upholding the CIT's order under Section 263. It concluded that: - The delay in filing the appeal was condoned. - The assessee, being a non-resident, was ineligible for the deduction under Section 80HHC. - The DTAA's non-discrimination clause did not override the specific provisions of Section 80HHC. - The AAR ruling on the taxability of the assessee's income was binding and could not be contested.
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