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TMI Blog2010 (10) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Double Taxation Avoidance Agreement entered into by Government of India with the Government of United Arab Emirates hereinafter referred to as 'Indo UAE tax treaty'). In terms of Article 13(3) of this Indo UAE tax treaty, as it stood at the relevant point of time, capital gains on alienation of shares are 'taxable only in the Contracting State of which alienator is resident' , This claim, however, did not find favour with the authorities below. Relying upon the decision of Hon'ble Authority for Advance Ruling in the case of Cyril Eugene Pereira's case ( 239 ITR 650), which holds that "an individual who is not liable to pay tax under the UAE law cannot claim any relief from the only tax which is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Contracting State imposes a tax in the situation to which exemption implies'. In the case of John N Gladden V Her Majesty the Queen 85 TC 5188, which was quoted with approval by the Hon'ble Supreme Court in Azadi Bachao Andolan's case (supra), Federal Court of Canada was observed that''' the non-resident can benefit from the exemption (under the treaty) regardless of whether or not he is taxable on that capital gain in his own country, If Canada or the US were to abolish the capital gains tax completely, while the other country did not, a resident of the country which has abolished the capital gains would still be exempt form capital gains in that country". It is thus clear that taxability in one country is not si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'liable to tax in the Contracting State by the virtue of an existing legal provision but would also cover the cases where that other Contracting State has the right to tax such persons irrespective of whether or not such a right is exercised by the Contracting State." 4. Learned Departmental Representative, however, dutifully relies upon the orders of the authorities below, and urges us to confirm the same. She highlights the reasoning adopted by the CIT(A), relies upon the rulings of the Hon'ble Authority for Advance Rulings followed by the CIT(A), and submits that there is no justification for any interference in the order of the CIT(A). 5. However, we see no reasons to take any other view of the matter than the view so taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Shipping and Travel (supra), had observed as follows:- An unusual case decided by the Dutch Gerechtsh of Amstredam Court of Appeals on 15 February 2006 confirms this decision. The owners of the Dutch company, X BV emigrated from the Netherlands to Greece in 1995 and advised the Dutch tax authorities that they now exercised management and contract fro their new location, as a consequence of which the company became a Greek resident. This was not in dispute in May 2000, the taxpayers informed the Dutch authorities that, sine their relocation, they had endeavoured to register the company with the Greek Tax authorities, but failed to succeed because of the Greek tax authorities, but failed to succeed because of the Greek bureaucracy the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national tax language as was visualized by Hon'ble Andhra Pradesh High Court in the case of CIT vs Vishakhapatnam Port Trust (144 ITR 146), can truly come into existence, because unless everyone, using a word, or a set of words, in a language, does not understand it in the same manner, that language will make little sense. There is one decision in favour of the assessee on this issue by the Dutch Court of Appeal and no other country judicial precedent from any other judicial forum has been brought to our notice. The view taken by this Tribunal has been followed in the aforesaid subsequent Dutch Court of Appeal judgment. These things taken together, when viewed in perspective discussed above, also persuade us not to take any other view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UAE for a period or periods aggregating totalling in aggregate at least 183 days in the calendar year concerned, and a company, which is incorporated in UAE and which is managed and controlled wholly in UAE". This amendment in the definition of resident of UAE thus accepts the broad proposition that the taxability in one of the Contracting States is not a sine qua non to avail treaty benefits in the other Contracting State. The fundamental assumption by the Assessing Officer that that "an individual who is not liable to pay tax under the UAE law cannot claim any relief from the only tax which is payable in India under the agreement" and that "the provisions of Double Taxation Avoidance Agreements donot apply to any cases where the same inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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