9911796707
TMI Blog1999 (5) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant would be entitled to be taxed at the lower rate of tax as per article 10-para. 2(b) and article 11-para. 2(b) of the said Double Taxation Avoidance Treaty - (a) at the rate of 15 per cent., on gross dividend income, arising in India (for dividend income prior to July 1, 1997) and (b) at the rate of 12.5 per cent., on gross interest income on investment accruing and arising in India to the applicant from the investments made in debentures and bonds of Indian companies or any other interest income on loans/advances made out of his moneys from his Non-Resident External Account ? Question No. 3 : Whether on the facts and in the circumstances of the case and having regard to the fact that the applicant is a resident of UAE in terms of article 4 of the said Double Taxation Avoidance Treaty, gains arising on sale/transfer of his movable properties would be taxable only in the UAE and not in India as per article 13-para. 3 of the said DTA ? The applicant claims to be an individual who is not a resident of India and is permanently residing in Abu Dhabi, UAE, since 1977. The applicant has annexed a copy of the employment agreement dated February 5, 1980, from which it appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant claims relief under various provisions of the Double Taxation Avoidance Agreement between India and the United Arab Emirates. Section 4 of the Income-tax Act imposes a (charge of) tax on the total income of a person for any assessment year at the rate that may be prescribed by any Central Act. "Total income" will have to be computed in accordance with the provisions of section 5 of the Income-tax Act. There is a difference between the total income of a person who is a resident and a person who is a non-resident. Broadly stated, the total income of a person who is a resident will include all income from whatever source derived which is received or deemed to be received in India in such tax year by or on behalf of such person and also any income which accrues or arises to him outside India during such year. Sub-section (2) of section 5 deals with the computation of total income of a non-resident. It lays down that the total income of a non-resident will include all income from whatever source derived which is received or is deemed to be received in India in such year by or on behalf of such person or which accrues or arises or is deemed to accrue or arise to him in India d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 265 of the Constitution lays down that no tax shall be levied or collected except in accordance with law. Tax imposed by any Central Act cannot be reduced or waived or modified by the Government unless and only in so far as it is authorised by the statute. Moreover, modification of a rate of tax imposed by the statute can be made by the Government only to the extent empowered by the statute. Section 90 of the Income-tax Act enables the Central Government to enter into an agreement with foreign countries for granting relief in respect of income which has suffered income-tax both under the Indian law and the laws of the foreign country. The provisions of section 90 are as under : "90. (1) The Central Government may enter into an agreement with the Government of any country outside India- (a) for the granting of relief in respect of income on which have been paid both income-tax under this Act and income-tax in that country, or (b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country, or (c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under any law relating to the taxation of income or profits in force in that country, or (c) for exchange of information for the prevention of evasion or avoidance of surtax chargeable under this Act or the tax chargeable under the corresponding law in force in that country or investigation of cases of such evasion or avoidance, or (d) for recovery of tax under this Act and under any law relating to the taxation of income or profits in force in that country. The Central Government under section 24A is only empowered to grant relief by an agreement with a foreign country in respect of chargeable profits "on which have been paid both surtax under this Act and tax of a similar character or income-tax on such profits in that country." Therefore, no relief can be granted under clause (a) of section 24A except in cases where surtax has actually been paid on chargeable profits in the two contracting countries. Clause (b) also deals with the situation where chargeable profits are liable to be taxed twice under the Indian Act and also under the corresponding tax law in the contracting country according to the law in force in that country. Clause (c) speaks of exchange of information fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt relief to a taxpayer by an agreement with a foreign country where his income has been subjected to tax both in the foreign country and India. This power can be exercised only for avoidance of double taxation of the same income under the Income-tax Act or the Surtax Act and the corresponding laws in force in the foreign country. This matter can be viewed from the angle of the taxpayer. Liability to pay tax both in India and the foreign country entitles a taxpayer to claim relief under the rules laid down in the Double Taxation Avoidance Agreement. If a taxpayer pays tax or is liable to pay tax under the laws in force in one country alone, he cannot claim any relief from a non-existent burden of double taxation under the Double Taxation Avoidance Agreement. The Double Taxation Avoidance Agreement is meant only for the benefit of taxpayers who are liable to pay tax twice on the same income. Here, we have an Agreement entered into between the Government of the Republic of India and the Government of the UAE for the avoidance of double taxation with respect to tax on income and also on capital in exercise of power given by section 90 of the Income-tax Act, 1961 , and section 24A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving an individual from the brunt of double taxation arises. If the agreement is examined, it will be seen that no attempt has been made in the agreement to give relief to any individual who does not pay tax in the UAE. We shall now examine the provisions of the Double Taxation Avoidance Agreement between India and the United Arab Emirates (UAE). The agreement came into force on September 22, 1993. It was entered into by the Government of India in pursuance of the powers conferred by section 90 of the Income-tax Act, 1961. The object of the agreement is "for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital". The following articles are relevant for this case (see [1994] 205 ITR (St.) 49) : "Article 1 Personal scope This agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes covered 1. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital including taxes on gains from alienation of movable or immovable property as well as on capital appreciation. 2. The existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either State, he shall be deemed to be a resident of the State in which he has an habitual abode ; (c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; (d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual Agreement. 3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. Article 6 Income from immovable property 1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such interest may be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed. (a) 5 per cent. of the gross amount of the interest if such interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution ; and (b) 12.5 per cent. of the gross amount of the interest in all other cases. 3. Notwithstanding the provisions of paragraph 2 interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by : (i) the Government, a political sub-division or a local authority of the other Contracting State ; or (ii) the Central Bank of the other Contracting State. 4. The term "interest" as used in this Article means income from debtclaims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such fixed base may be taxed in that other State. 3. Gains from the alienation of any property other than that mentioned in paragraphs 1 and 2 shall be taxable only in the Contracting State of which the alienator is a resident." Now the question is of which State is the applicant a resident Article 4 defines "resident" of a Contracting State to mean any person who is liable to tax in that State by reason of his domicile, residence, place of management and place of incorporation, etc. The applicant is an individual and as such is not liable to pay any tax in the UAE. He may be working there for gain and may be getting a monthly salary but he has no statutory liability to pay any tax at all. He cannot be treated as a resident of the UAE under article 4(1) of the Agreement. Paragraph 2 of ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y only when an individual is found to be a resident of both the Contracting States. Paragraph 3 will apply where a person other than an individual is a resident of both Contracting States. But neither paragraph 2 nor paragraph 3 will apply unless the individual or a person other than an individual is found to be resident of both the Contracting States. From all these provisions, it follows that unless a person is liable to pay tax in a Contracting State he is not to be treated as a resident of that State under article 4. Individuals falling under clauses (a), (b), (c) and (d) of paragraph 2 must be persons who are liable to pay tax in both the Contracting States. Likewise non-individuals in paragraph 3 must be persons who are liable to pay tax in both the Contracting States. There is no other criterion laid down for determination of residence other than liability to pay tax under article 4. Tax has been defined to mean Indian tax or the UAE tax. Article 2 makes the agreement applicable only to "existing taxes" in UAE and in India which means the taxes detailed in paragraph 2 of article 2 which were in force on the date of the signing of the Agreement of September 22, 1993. In order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief from double taxation of income. Relief can be granted under section 90(1)(a) when there has been actual payment of tax in both the contracting countries. Relief can also be granted to a taxpayer from the burden of double taxation under section 90(1)(b) by an agreement with a foreign country. This agreement can be entered into only when there is a law in force in the foreign country subjecting the income which is taxable in India to a further levy of tax. Section 91 seeks to grant relief in cases where income liable to tax in India has been actually charged to tax in a foreign country with which India does not have a double taxation agreement. The important thing to note is that neither under section 90 nor under section 91, has any attempt been made to grant relief where there is no law in force in a foreign country subjecting to tax the same income which is taxable under the Income-tax Act. The object and the scope of the Double Taxation Avoidance Agreement as well as the ambit of the power of the Central Government under section 90 of the Income-tax Act and section 24A of the Surtax Act must be kept in view in interpreting the various articles of this agreement which is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er rate of tax is given in paragraph 2 only because the dividend income has to bear full tax under paragraph 1 which is the primary tax. The endeavour of article 10 is to grant relief in a case of double taxation of dividends. Paragraph 2 pre-supposes that a tax is leviable under paragraph 1. The word "also" in paragraph 2, signifies that besides the first levy under paragraph 1, there may be an additional levy of tax. If there is no liability to pay tax at all in the UAE, paragraph 1 will not be attracted. In such a case there cannot be any question of a further tax "also" in the State in which the company resides which in this case is India. Since, this tax payable in India is not something in addition to the tax payable in the UAE, paragraph 2 of article 10 is not attracted. This means the treaty does not restrict the liability of the shareholder to pay tax on his dividend income according to the domestic law. Statutory levy of tax by the Income-tax Act read with the annual Finance Acts cannot be avoided unless the applicant can show that such levy will result in double taxation for which relief has been given under the Double Taxation Avoidance Agreement. As there is no double ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in India and not at all under any corresponding law in force in a foreign country. It must be presumed that the Central Government did what it could lawfully do. Paragraph 2 of article 10 is clearly conditional upon paragraph 1. It has been argued that the U. N. and O.E.C.D. Model Codes have been devised to alleviate the burden of a taxpayer from the rigours of double taxation. This agreement based on the model case grants relief from not only actual but potential double taxation. Lord Macnaghten in the case of London County Council v. Attorney-General [1900] 4 TC 265, observed that (page 293) : "Income-tax, if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else". The argument based on potential double taxation overlooks this simple but basic fact that income tax is a tax on income. It is an actual annual levy and not a potential tax. It has to be an existing tax for the avoidance of which an agreement can be entered into. If there is no tax leviable on an individual's income in the UAE, there cannot be any question of avoidance of double taxation of that income by India and the UAE. Double Taxation Agreements are agreements to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe for double taxation. There is no question of avoidance of something which is non-existent. It has to be emphasised at the cost of repetition that the agreement with the UAE is applicable only to the existing taxes and not to any potential levy of taxes. Taxes covered under article 2 are taxes which have been imposed on total income or total capital or elements of total income or total capital which will include dividend, interest and capital gain. It is specifically declared that the agreement applies to the existing laws enumerated therein. There is no existing law taxing the income of individuals in the UAE. Therefore, the agreement cannot be extended to the income of individuals. Similar will be the position of interest under article 11. Paragraph 1 thereof speaks of interest arising in one State and paid to the resident of the other State. As we have noticed, in view of the special definition given in article 4, the petitioner cannot be treated as a resident of Dubai. There is no question of interest income being taxed in Dubai. Paragraph 2 of article 11 also speaks of "such interest" which means "interest arising in a Contracting State and paid to a resident of the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the agreement as and when such new taxes are imposed. The argument that even though a person has no existing liability to pay any tax in the UAE he will be entitled to relief from potential double taxation is incomprehensible. The Central Government can enter into an agreement with the Government of any foreign country for the avoidance of double taxation of income under the Income-tax Act and under the corresponding law in force in that country. The Central Government in the instant case has actually entered into an agreement for this purpose with the UAE. The agreement is avowedly for the purpose of avoiding double taxation and also for the prevention of fiscal evasion. If there is any double taxation of income of a person both in India and also in the UAE, this agreement will apply. But in cases where there is no double taxation of income at all during the period under consideration, there is no scope for granting relief from something which does not exist while making assessment of income for that period. Relief from the burden of taxation of income in India cannot be claimed on the plea of double taxation, even when such income is not liable to be taxed at all in the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubordinate to him only in respect of the applicant and the transaction involved. This is not to say that a principle of law laid down in a case will not be followed in future. The Act has made the ruling binding in the case of one transaction only and the parties involved in that case in respect of that transaction. For other transactions and for other parties, the ruling will be of persuasive nature. One important point which was lost sight of in Rafik's case [1995] 213 ITR 317 (AAR), was the scope of section 90 of the Income-tax Act which confers upon the Government of India jurisdiction to enter into an agreement for the purpose of avoidance of double taxation only in a case where income of a person is taxable twice, i.e., under the Indian law as also under the corresponding law in force in a foreign country. If the income of a person is not taxable at all under the foreign law, the Government of India is not empowered to enter into any agreement for avoidance of double taxation in respect of that income of that person. This important factor has to be borne in mind for construing the agreement. The object of the agreement is to avoid the burden of double taxation. Therefore, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely, this agreement with the UAE has been carefully worded to keep it within the ambit of the authority given to the Government of India by section 90 of the Income-tax Act, 1961. This aspect of the matter was overlooked in Rafik's case [1995] 213 ITR 317 (AAR). Rafik's case [1995] 213 ITR 317 (AAR), takes note of the fact that the only tax imposed in the UAE is on income of the corporate bodies. It further notices that though each Emirate has its own income-tax decree, the decrees are similar. The judgment records (page 327) : "However, it is clear that individuals like the applicant, are not liable to tax under the Dubai law. This being so, it can be said, the applicant cannot claim to be a resident of the UAE, entitled to the benefit of articles 10, 11 and 13 of the Double Taxation Avoidance Agreement." The judgment goes on to say at page 328 of 213 ITR : "While, ex facie, the above seems to be a simple way of reading the Double Taxation Avoidance Agreement, a more liberal interpretation is suggested by other circumstances. The most crucial circumstance to be taken note of is that there is no income-tax or wealth-tax on individuals in any of the Emirates. There was no such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company or any other entity under section 90 unless that income is also liable to be taxed under the law of the other country. The agreement goes to show that the Central Government has not done what it could not do under section 90 and no interpretation should be placed on the agreement which tends to make the agreement ultra vires section 90 of the Income-tax Act. The definition given to "resident" in article 4 of the Double Taxation Avoidance Agreement is a reproduction of the definition of the expression "resident" given in the UN model code. That definition has been reproduced verbatim in article 4 without any modification. It will not be right to suggest that there was a special underlying object of encouraging UAE investments in India in that definition. The only country where the applicant pays income-tax is India. He cannot be treated as a resident of UAE for the purpose of the tax treaty under consideration. Moreover, the word used in the agreement is quite clear. In Rafik's case [1995] 213 ITR 317 (AAR), it was clearly recognised that "individuals are not liable to tax under the foreign law . . . ." It is also recognised that the applicant cannot claim to be a reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 317 (AAR). On a reading of the preamble to the agreement there can be no dispute that the underlying idea behind the agreement is to promote mutual economic relations by relieving the taxpayers from the burden of paying tax twice on the same income in two different countries. This double obligation to pay tax on the same income is sought to be relieved by the agreement. However, the problem of double taxation can only arise if the same income has been subjected to tax simultaneously in two countries in the same year. But here we have a case where an individual has been subjected to tax in respect of his income in India only. There is no tax payable at all by an individual on his income under any law in force in the UAE. Having regard to the object of the Double Taxation Avoidance Agreement, there is no reason to assume that the agreement seeks to grant relief to the individuals residing in the UAE from the burden of payment of the only tax payable by them in India. Moreover, the Government cannot alter this statutory liability to pay tax except to the extent it has been empowered by the statute to do so. The Government cannot reduce the rate of tax fixed by the Finance Act or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to notify the Indian authority about such changes in tax laws. Thereupon, the tax levied on income of an individual will qualify for the relief provided in the Double Taxation Avoidance Agreement. Further in all these articles, residence of an individual is a very important factor. For example, income derived by a resident of the Contracting State in respect of professional services shall be taxable only in that State. This is the general law subject to some exceptions. Likewise, salaries, wages and other remuneration derived by a resident of the Contracting State, shall be taxable only in that State. However, if the employment is in the other Contracting State then such remuneration may be taxed in the other State. A close scrutiny of the articles will reveal that these articles have been worded in a way that an individual may not have to pay full amount of tax in both the Contracting States. If the salaries, wages and other remuneration derived by a person residing in the UAE is not taxable at all there then he is not a resident of the UAE. There is no scope for application of articles 14 and 15 to his case. In fact, the importance of the word "resident" in these articles is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, these provisions will become effective as soon as tax laws corresponding to the Indian taxes come in force in the UAE. In Rafik's case [1995] 213 ITR 317 (AAR), it was recognised that this will be the position if a literal interpretation of the agreement was made. But it was held that a liberal interpretation should be made to grant relief to the individuals residing in the UAE and the agreement should be held to be effective for individuals from the day it came into force. It is difficult to comprehend that the Central Government with full knowledge that no income-tax is at all payable by an individual in the UAE would enter into an agreement about non-existent taxes. If the Central Government entered into the agreement to grant tax relief in India to nontax paying individuals in the UAE, then the agreement would be a flagrant violation of the powers given to the Central Government by section 90 of the Income-tax Act and ultra vires the Income-tax Act and the annual Finance Act. It was further contended that paragraph 1 of article 4, has given a very restricted interpretation of the word, "resident of a Contracting State", which means any person who is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer finds that any income of the assessee has already been subjected to tax in another country with which the Government of India has not entered into any agreement for avoidance of double taxation, then the Assessing Officer will have to allow deduction from the income-tax payable on such income in the manner laid down in section 91. Similarly, if at the time of assessment, the Income-tax Officer finds that the assessee has earned income which is taxable under the existing laws of another country with which the Government of India has entered into an agreement for avoidance of double taxation then relief has to be given to the assessee under section 90. There are two situations under which this relief can be given : (a) Where income-tax has been paid both under the Income-tax Act and also the corresponding Act in the contracting country ; or (b) Where double taxation is going to take place under the Indian Act and the corresponding law in force of the contracting country. Since it is an annual levy, the Income-tax Officer has to take into consideration the law in force of the year for which the assessment is being made. If the Assessing Officer finds that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uture contingencies of imposing of such laws in the UAE. The agreement must be implemented as it is. An individual residing in the UAE who does not pay any tax there will be entitled to the full benefit of the agreement. There are three major difficulties in upholding this argument. The agreement is for avoidance of double taxation and prevention of fiscal evasion not for reducing the burden of the only tax payable by individuals like the petitioner in India. If there is no corresponding income-tax law in respect of individuals in the UAE, no question of double taxation of such individuals can arise. The avowed object of the agreement is to avoid double taxation. The agreement must not be presumed to be anything other than what it is stated to be. Secondly, as has been emphasised in this judgment earlier, the Central Government is not empowered by section 90 to enter into any agreement for avoidance of double taxation unless there is a corresponding law in force in the foreign country. The Central Government cannot exceed the scope of section 90 by entering into an agreement even where there is no corresponding tax law in force for individuals in the UAE. Tax levied by Parliament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AE passes law imposing tax on individuals and notifies such law in the manner laid down in article 3. In that event, it will not be necessary to enter into a fresh agreement. Therefore, it will not be right to say that all these provisions are presently applicable and not for a future contingency. In this context, the definition of "residence" given in article 4 has to be kept in view. This definition is specially given for the purpose of this agreement. A person who does not pay any tax in the UAE is not a resident of the UAE at all. The provisions granting relief to residents of the UAE cannot be availed of by persons who do not pay any tax there. The position becomes even more clear from articles 20 and 25. Article 20 provides that an individual "who is a resident of a Contracting State" goes to the other Contracting State as a student at a recognised educational institution for a period not exceeding six years, shall be exempt from tax in that Contracting State on all remittances from the first mentioned Contracting State for the purpose of his maintenance, education or training and any remuneration (not exceeding 20,000 Indian rupees or its equivalent sum in UAE currency per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on the OECD and the UN model of double taxation which seeks to reduce the burden of double taxation. The mischief that the UN model seeks to rectify is the likelihood of the same income being taxed twice in two different countries in that same year. Both the UN model and the OECD models were devised for relieving the taxpayer from the burden of paying tax on the same income for the identical period. The definition of "resident" in article 4 is also based on the UN model convention. A resident paying tax in one country is entitled to get relief from the burden of double taxation when a similar tax is imposed by the Contracting State. The adoption of the UN model or the OECD model in the Double Taxation Agreement between India and the UAE is not to reduce the burden of the only tax payable in India by the individuals. No relief from double taxation can be given unless the petitioner is in a position to allege that he is liable to be taxed twice in respect of the same income in the same year in two different countries and as such he is entitled to invoke the protection of the double taxation agreement. Article 31 declares that the agreement shall remain in force indefinitely. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man of the authority finds himself unable to agree with the ruling given in Rafik's case [1995] 213 ITR 317 (AAR), it has become necessary for me to explain my position while concurring with the ruling given by him. Even in Rafik's case [1995] 213 ITR 317 (AAR), the then chairman had taken the view that individuals were entitled to the benefit of concessions under the provisions of the Income-tax Act on account of the provisions of article 4 of the Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to the Taxes on Income and Capital between India and the United Arab Emirates (DTAA). He observed as under (page 331) : "It will thus be seen that the language of paragraph 1 of article 4 lends itself to two equally plausible interpretations. One of them seems to give effect to the natural meaning of some of the words employed in the paragraph. . . The second interpretation perhaps places some strain on some of the words but gives a meaning to all the words employed, fully accords with the intention and objective of the agreement and gives immediate effect to all its terms. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi Publishing (P.) Limited, 1998, page 193), has observed as under : "If a Contracting State does not levy income-tax on individuals or on certain sources of income of the individual, no individual who is required to pay any tax in the other Contracting State will be exposed to any risk of double taxation on the whole of his income or any part of it derived from the exempt sources and, therefore, he has no scope for invoking the Double Taxation Avoidance Agreement and seeking any 'relief' from the country in which he has a tax liability on whatever income does not suffer any tax under the law. This aspect, it is submitted with respect, has escaped due consideration in the rulings given by the AAR in Mohsinally Ali Mohammed Rafik's case [1995] 213 ITR 317 and Dr. Rajnikant R. Bhatt v. CIT [1996] 222 ITR 562. There is a view that neither of the parties concerned in these two cases was entitled to a ruling from the AAR because there was no allegation or expression of apprehension of double taxation by them. It could be argued that they were merely trying to exploit the fact that they were deriving income from both the UAE a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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