9911796707
|
Home
Issues:
- Interpretation of section 214 of the Income-tax Act, 1961 regarding entitlement to refund and interest. - Requirement of producing a certificate of assessment from foreign tax authorities for claiming refund. - Application of the Agreement for Avoidance of Double Taxation between India and Pakistan. - Justification for the Income-tax Officer to rely on collateral evidence in the absence of a certificate of assessment. Analysis: The judgment by the Bombay High Court dealt with a reference made by the Revenue regarding the assessment year 1965-66. The primary issue revolved around the entitlement of the assessee, a public limited company owning factories in Pakistan, to a refund of Rs. 1,95,479 and interest under section 214 of the Income-tax Act, 1961. The Income-tax Officer had assessed the total income of the assessee and calculated the tax payable on the income from Pakistan. The assessee claimed a refund based on the taxes already paid and deducted, which the Income-tax Officer disputed, requiring a certificate of assessment from Pakistani tax authorities for the refund to be processed. Upon appeal, the Appellate Assistant Commissioner rejected the claim, emphasizing the necessity of the certificate of assessment from Pakistan. However, the Income-tax Appellate Tribunal took a different stance, considering the strained political relations between India and Pakistan and the failure of Pakistani tax authorities to issue the certificate. The Tribunal allowed the assessee to provide collateral evidence, such as copies of assessment orders, to establish the tax paid in Pakistan. The Tribunal's decision was challenged based on the Agreement for Avoidance of Double Taxation between India and Pakistan, which was deemed essential for claiming the refund. The High Court analyzed the relevant provision of the agreement, specifically sub-clause (b) of article VI, which outlined the procedure for holding the collection of a portion of the demand in abeyance pending the production of a certificate of assessment from the other state. The Court noted that while the certificate of assessment is the preferred evidence, the agreement does not mandate its production as a prerequisite for the refund. In cases where obtaining the certificate is impossible, the assessee can rely on other satisfactory evidence to prove tax payment in the foreign jurisdiction. Ultimately, the High Court upheld the Tribunal's decision, stating that in the circumstances of the case, the Tribunal was justified in not insisting on the certificate of assessment but accepting alternative evidence to establish the tax paid in Pakistan. The judgment favored the assessee, affirming their entitlement to the refund and interest under section 214.
|
