9911796707
TMI Blog1994 (4) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... t is contended that the respondents be directed to give effect to article 9 of the covenant between the Government of India and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital gains executed under section 90 of the Income-tax Act, 1961. In support of that, it is pointed out that the Assistant Commissioner of Income-tax, Company Circle, Calcutta, has issued a certificate dated June 18, 1993 (annexure "K"), to the effect that M/s. Arabian Express Line Limited, United Kingdom, is a resident of the United Kingdom and that in accordance with article 9(1) of the Agreement for the Avoidance of Double Taxation between the Government of India and the Government of the United Kingdom, the entire shipping income of the United Kingdom company is exempt from tax in India with effect from April 1, 1992. It is also stated that the aforesaid certificate would be in force till the validity of the relevant provisions exempting such income in the double taxation avoidance agreement with the United Kingdom and is subjected to any other order that may be passed su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement 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.. and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement. (2) Where the Central Government has entered into an agreement with the Government of any country outside India under sub-section (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. " It is an admitted fact that there is a covenant between the Government of India and the Government of the United Kingdom of Great Britain for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital gains executed under section 90 of the Income-tax Act. For this purpose, the Central Government has issued a not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Further, in the present case, there is a specific provision in article 9 of the convention to the effect that income of an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that State. In view of this specific covenant, the Income-tax Officer would have no authority or jurisdiction to assess the petitioners under section 172 of the Income-tax Act. However, Mr. Thakore, learned counsel for the respondent, submitted that section 172 of the Income-tax Act is a special provision which provides for the summary mode of assessment of a shipping business of non-residents and sub-section (1) thereof provides that notwithstanding anything contained in the other provisions of this Act, the said section shall apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India. In our view, this submission i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable in a case where there is a convention between the Government of India and the foreign countries as provided under section 90 of the Income-tax Act. In the case of such agreement, section 90 would have overriding effect. For this purpose, learned counsel, Mr. Shelat, rightly relied upon the decision in the case of CIT v. R. M. Muthaiah [1993] 202 ITR 508 (Kar), wherein the court has considered the provisions of section 90 of the Income-tax Act and also the Double Taxation Avoidance Agreement between India and Malaysia and Circular No. 333 issued by the Central Board of Direct Taxes. The court has, inter alia, observed that the provisions of sections 4 and 5 of the Income-tax Act shall have to be read subject to the provisions of the agreement in question and that the agreement in question, by necessary implication, takes away the power of the Indian Government to levy tax on the income in respect of certain categories as mentioned in the agreement. The court further held that if a tax liability is imposed by the Income-tax Act, the agreement may be resorted to for negativing or reducing it and in case of difference between the provisions of the Act and of the agreement, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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