1988 (12) TMI 140 - AT - Income Tax

Summary

Issues Involved:
1. Entitlement to double taxation relief under Section 90 of the Income Tax Act, 1961.
2. Applicability of Section 154 for rectification of mistakes apparent from the record.

Issue-wise Detailed Analysis:

Entitlement to Double Taxation Relief under Section 90:
The assessee received dividend income from a Malaysian company for the assessment years 1982-83 and 1983-84. There existed an agreement between the Government of India and the Government of Malaysia for the avoidance of double taxation, which was not initially claimed by the assessee during the assessment proceedings. The Income Tax Officer (ITO) completed the assessments without considering the double taxation relief under Section 90. The assessee later filed applications under Section 154, seeking rectification for not allowing the double taxation benefit, which the ITO rejected.

The CIT (Appeals) observed that the assessee's contention should succeed on merit. For the assessment year 1982-83, the CIT (Appeals) found no apparent mistake in the ITO's assessment since the assessee did not apprise the ITO of the foreign dividend during the assessment proceedings. However, for the assessment year 1983-84, the CIT (Appeals) found that the ITO was aware of the foreign dividend and should have allowed relief under Section 90, even if it was not claimed. Consequently, the CIT (Appeals) directed the ITO to allow the relief for the assessment year 1983-84.

Applicability of Section 154 for Rectification:
The assessee argued that all necessary facts and evidence for claiming double taxation relief under Section 90 were available to the ITO during the assessment proceedings. The failure to allow such relief constituted a mistake apparent from the record, rectifiable under Section 154. The assessee relied on decisions from the Calcutta High Court, which supported the view that relief could be claimed through rectification if all relevant materials were present in the record.

The departmental representative contended that the assessments were based on the statements furnished by the assessee, which showed only the net dividend received after tax deduction. It was argued that there was no mistake apparent from the record, and the assessee's application under Section 154 was rightly rejected.

Upon review, the Tribunal found that the materials required for claiming relief under Section 90 were indeed present in the ITO's records. The dividend income received from the Malaysian company was subjected to tax in Malaysia, and the agreement for avoidance of double taxation was in force. The Tribunal concluded that the ITO was duty-bound to allow relief under Section 90 based on the available facts. The failure to do so constituted a mistake apparent from the record, justifying rectification under Section 154.

The Tribunal upheld the CIT (Appeals) order for the assessment year 1983-84, directing the ITO to allow the relief. For the assessment year 1982-83, the Tribunal directed the ITO to allow relief under Section 90, reversing the CIT (Appeals) decision.

Conclusion:
- The assessee's appeal for the assessment year 1982-83 was allowed, directing the ITO to grant double taxation relief under Section 90.
- The departmental appeal for the assessment year 1983-84 was dismissed, upholding the CIT (Appeals) decision to allow the relief under Section 90.

The judgment emphasizes the importance of considering all relevant materials in the record and the duty of the ITO to grant appropriate reliefs, even if not explicitly claimed during the assessment proceedings.