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TMI Blog2014 (5) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... see - the assessee had right to file the return of global income in India and the Revenue is bound to give effect to such return – thus, CIT(A) is not correct in holding that income from house property from Australian property was not assessable in India – the order of the CIT(A) is set aside and the AO is directed to assess the income of house property that is loss from such house property in the hands of the assessee – Decided in favour of Assessee. - ITA No. 212/Chd/2014 - - - Dated:- 20-5-2014 - SHRI T.R. SOOD AND MS. SUSHMA CHOWLA, JJ. Shri. Manish Kumar for the Appellant Smt. Jyoti Kumari for the Respondent ORDER T.R. Sood, Accountant Member This appeal has been filed by the assessee against the order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed because the payment of interest to ANZ Bank, Australia amounting to Rs. 1043207/-. The assessee has purchased the property in Australia which was already on rent and obtained a loan from ANZ Bank Australia. The Assessing officer observed that in view of Sec 25 which prescribed that interest will not be allowed if interest is payable outside India which is chargeable to tax in India and tax has not been deducted. Since the assessee had not deducted the tax, therefore possible income from the property was assessed to tax after ignoring claim of the interest. 4. On appeal it was mainly submitted that property purchased in India was already on residential tenancy agreement vide agreement dated 13.1.2004. A loan was sanctioned by ANZ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing officer was not justified in disallowing the interest. The Revenue has not filed any appeal against this finding and therefore we are not required to discuss this issue further. However, during appellate proceedings the Ld. CIT(A) referred to the decision of CIT v. PVAL Kulandagan Chettiar, 267 ITR 645. In view of this decision according to the Ld. CIT(A) as far as rent income from Australia is concerned, the assessee was required to file the return in Australia and such income could not be included in Indian income. Therefore negative income cannot be assessed in India. The detail findings are as per para 4.7 and 4.8 which are as under: 4.7 However, the appellant is liable to file his return of income in Australia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot eligible for claiming credit for tax paid in Australia against his income from other head in India. The AO is directed to ascertain the correct amount of (Gross) rent received by the appellant from house property in Australia and take the same amount for computing income under the head House Property in the return filed in India. 4.8 Without prejudice to the above, there is another aspect of the case. As referred above during the course of appellate proceedings the case of CIT v. P.V.A.L Kulandagan.Chettiar (SC) 267 ITR 654 was discussed with the appellant. In this case the Hon'ble Supreme Court has held that the income arising form immovable property from property situated in another contracting state is taxable only i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Hon'ble Court observed that the assessee's fiscal connection was more with Malaysian territory. In the case of the assessee, the assessee is admittedly resident of India only. In any case sub-sec (3) to Sec 90 was introduced by Finance Act, 2003 w.e.f. 1.4.2004 where the power was given to Central Govt to clarify the meaning of a particular expression through a notification wherever the provision was inconsistent with the provision of the Act vis- -vis the DTAA. In this regard Govt of India issued a notification No. 91/2008 dated 28.8.2008 and the relevant clause of this notification reads as under: The Mumbai Bench of the Tribunal held in the matter of Essar Oil Ltd. v. Department of Income Tax that: 63 In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. Further Sec 90(2) (3) read as under: Sec 90(2) - Where the Central Govt has entered into an agreement with the Govt of any country outside India or specified territory outside India, as the case may be, under sub-sec (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee. 90(3) - Any term used but not defined in this Act or in the agreement referred to in sub-sec (1) shall unless the context otherwise requires , and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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