9911796707
TMI Blog1983 (4) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act, 1961 ('the Act'). 3. There is an agreement dated 26-3-1969 [See Taxmann's Direct Taxes Circulars, Vol. 1, pp. 460-711 between India and France for the Avoidance of Double Taxation within the meaning of section 90(b) of the Act. In accordance with article XIV thereof, the salary earned by the assessee in France cannot be taxed in India because he did not render the services in India. The question was as to whether his salary income earned in France could be included in his total income for rate purposes while making his assessment under the Act in India. The case of the assessee was that the income earned in France is not only exempt from tax but also could not be included in his total income for rate purposes. The ITO did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xation. He referred to section 5 of the Act, which states that in the case of a resident, income earned even outside India shall be included in the total income. Then, he referred to the agreement dated 26-3-1969, and pointed out that the said agreement only states that under certain circumstances, certain items of income will not be subjected to tax, by one of the contracting parties. He pointed out that the said agreement does not refer to the total exclusion of any item from the total income. On the contrary, article XIX of the agreement states that the laws in force in either of the Contracting States will continue to govern the taxation of income. Again, article XIX(4) states : "Income which, in accordance with the provisions of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find force in the contentions raised for the revenue. Section 5 clearly states that in case of a resident, like the assessee, income arising even outside India has to be included in his total income. There are certain items which may be included in total income, but yet be not subjected to tax like those enumerated in Chapter VI[I] of the Act. Section 110 of the Act states that where any item is included in the total income on which no tax is payable, then the tax will be charged on the remaining income at the rate applicable to that income, which is arrived at after including the exempted income in the total income. In other words, unless an income cannot be included in the total income of the assessee, it will have to be reckoned for ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Double Taxation Agreement between India and Malaysia, but we do not find any provision therein which is similar to article XIX(4) of the agreement dated 26-3-1969 between India and France. In our opinion, the decision in the case of Kulandayan Chettiar rested on this crucial fact, namely, the absence of a provision similar to article XIX(4) of the agreement dated 26-3-1969 in the agreement between Malaysia and India. Hence, we do not find anything in the said case to reverse the conclusion we have already arrived at. 10. For the above reasons, we hold that the AAC indeed erred in his decision. Hence, we vacate his order and restore that of the ITO on the point under consideration. 11. In the result, the appeal is allowed. - - Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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