1991 (4) TMI 203 - AT - Income Tax

Summary

Issues:
1. Taxability of pension received in India from the UK for the assessment year 1982-83.

Analysis:

Issue 1: Taxability of pension received in India from the UK for the assessment year 1982-83

The appeal before the Appellate Tribunal concerned the taxability of an amount of Rs. 70,920, being the pension received by the assessee in India from the UK for the assessment year 1982-83. The Income-tax Officer had included this amount as part of the assessee's income, despite the contention that it was foreign income already taxed in the UK. The Commissioner(Appeals), however, accepted the assessee's argument, relying on various legal precedents and circulars, and held that the pension amount accrued abroad and could not be taxed in India under sections 5 and 15 of the Income-tax Act. The Commissioner(Appeals) deleted the addition of Rs. 70,920 from the assessee's income.

The departmental representative argued that since the pension was accrued and received in India, it should be taxable in India. However, the representative for the assessee pointed out that in previous assessment years, the pension received from the UK was not included as taxable income in India. The Income-tax Officer's assessment records for the years 1979-80, 1980-81, and 1981-82 confirmed this fact. Additionally, the circular from the Central Board of Direct Taxes dated 20-2-1979 clarified that pensions received abroad and remitted to India were not taxable in India. The circular also specified that pensions received in India by residents for services rendered abroad were considered income accruing abroad and not liable to tax in India. Moreover, a Double Taxation Agreement between India and the UK stated that pensions paid by the UK Government for services rendered were taxable only in the UK, not in India.

Considering the legal provisions, circulars, and agreements, the Tribunal upheld the Commissioner(Appeals)'s order, emphasizing that the pension received by the assessee in India from the UK was not taxable in India for the assessment year 1982-83. The Tribunal dismissed the Revenue's appeal, affirming the correctness of the Commissioner(Appeals)'s decision under the law.

In conclusion, the Tribunal ruled in favor of the assessee, holding that the pension amount received in India from the UK was not taxable in India for the assessment year 1982-83, based on legal provisions, circulars, and international agreements governing taxation of such income.