9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (2) TMI 513 - HC - Income TaxRevision u/s 263 - subsequent Treaty will automatically apply to the present India- Netherlands DTAA also - Held that - This Court is of the view that the impugned order passed by the CIT (IT) under Section 264 of the Act on 30.3.2016 cannot hold the field and the same deserves to be set aside. As far as the issue of there being a requirement of issuing a separate Notification for enforcing the later Treaty with another OECD country, viz., Finland, in the present case is concerned, this Court does not find any justification in the contentions raised on behalf of the Revenue, that such a Notification was required to be issued by the Government of India to enforce such later Treaty between India Finland in the present case. The Protocol clause quoted above in the India- Netherlands DTAA itself provide for such automatic application of subsequent Treaty, to the India Netherlands Treaty in hand and therefore, no such separate Notification was envisaged to be issued for enforcing such subsequent Treaty with another OECD country, viz., Finland, to be made applicable to the facts of the present case. The two reasons assigned by CIT (IT) in the impugned order, are no longer sustainable and therefore, the impugned order cannot be sustained in the eye of law. - Decided in favour of assessee
Issues:
1. Interpretation of Double Taxation Avoidance Agreements (DTAA) and Protocol clauses. 2. Necessity of a separate notification for enforcing subsequent treaties. 3. Validity of orders passed by the Commissioner of Income Tax (CIT). 4. Impact of previous legal rulings on the current case. 5. Tax treatment under specific DTAA provisions. 6. Requirement for detailed consideration of factual aspects in tax cases. Analysis: 1. The judgment addresses the interpretation of DTAA and Protocol clauses concerning the automatic application of subsequent treaties. The petitioner contested the order of the CIT (IT) based on the Protocol's provisions, arguing that no separate notification was required for the India-Finland Treaty to apply to the existing India-Netherlands DTAA. The Court upheld this argument, emphasizing the automatic application of subsequent treaties based on the Protocol's language. 2. The issue of whether a separate notification was necessary to enforce the India-Finland Treaty was a key point of contention. The respondent argued that a notification was required, citing the absence of such notification as justification for the CIT's order. However, the Court disagreed, relying on the Protocol's provisions within the India-Netherlands DTAA to support the automatic application of subsequent treaties without the need for a separate notification. 3. The judgment evaluated the validity of the orders passed by the CIT (IT) and concluded that they could not hold in light of the Court's interpretation of the Protocol clauses. The Court set aside the impugned order and directed the matter to be reconsidered by the CIT (IT) in accordance with the legal principles discussed in the judgment. 4. The impact of previous legal rulings, specifically the decision of the Authority for Advance Rulings (AAR) in the Steria case, was examined. The Court noted that the AAR's decision had been set aside by the Division Bench of the Delhi High Court, rendering the reliance on that decision by the CIT (IT) unsustainable in the current case. 5. Detailed consideration of the tax treatment under specific DTAA provisions, such as Article 12 of the India-Netherlands Treaty, was highlighted. The petitioner argued that the fees for technical services, if rendered and paid in the Netherlands, should not be taxed in India based on the treaty provisions. This aspect, along with other factual considerations, was deemed essential for the CIT (IT) to re-examine while deciding the Revision Petition filed by the petitioner. 6. The judgment emphasized the requirement for a thorough examination of factual aspects, especially regarding the rendering and payment of services in specific jurisdictions. The Court directed the CIT (IT) to reconsider these factual elements while re-deciding the Revision Petition, underscoring the importance of a comprehensive review in tax cases. In conclusion, the High Court of Karnataka set aside the impugned order of the CIT (IT) and directed a fresh consideration of the matter, emphasizing the automatic application of subsequent treaties under the Protocol clauses of the DTAA and the necessity for detailed examination of factual aspects in tax cases.
|
