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TMI Blog2022 (10) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... A. no.21 of 2022, in M.A. no.665 of 2021, in Suo-Motu Writ Petition (Civil) no.3 of 2020, directed that the period from 15/03/2020 till 28/02/2022, shall stand excluded for the purpose of limitation as may be prescribed under any general or special laws in respect of all judicial and quasi judicial proceedings. As part of the limitation period for filing the present appeal was falling within the aforesaid time-period, in view of the order passed by the Hon'ble Supreme Court, the same shall be excluded till 28/02/2022 and thus, we are of the considered view that there is no delay in filing the present appeal and we proceed to decide the same on merits. 3. In this appeal, the Revenue has raised following grounds:- 1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in not appreciating the existence of commercial relation between the assessee and M/s. Ahuja Group." 2. "Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) erred in not appreciating the evidentiary value of statement of Shr. Jagdish Bhagwandas recorded u/s. 132(4) of the IT Act, 1961. 3. "Whether on the facts and in the circumstance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the same to the total income of the assessee u/s 69 of the Act. 6. In appellate proceedings before learned CIT(A), the assessee filed copy of Tax Domicile Certificate dated 21-02-2019 for the period of 01-04-2013 to 31-03-2014 issued by the Ministry of the Finance, UAE. The learned CIT(A) vide impugned order dated 11-02-2022 allowed the appeal filed by the assessee by following the findings of its predecessor in assessee's own case for assessment year 2010-11. The learned CIT(A) also noted that the said findings rendered in assessment year 2010-11 have also been upheld by Co-ordinate Bench of the Tribunal vide order on 23-11-2021. The relevant findings of the learned CIT(A) are as under: "9.3 This findings of the CIT(A) for AY 2010-11 have been confirmed by the Hon'ble Tribunal by order dated 23.11.2021. The Hon'ble Tribunal has held that unexplained investment could be taxed in India under sec 69, only if it can be proved that such investments were made out of income earned in India and that in the said case, an economic activity or a linkage of an income with the source country (India) which would trigger a tax incidence in India, was absent. Even if the sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y domiciled in the UAE, entitled to the benefits of the Indo UAE tax treaty. We are right now dealing with an assessment year in which tax residency certificate was not even mandatory, but quite fairly, that aspect has not even been raised before us. Coming to the taxability under the Indo UAE tax treaty, such an income is not specifically taxed under any of the heads in the tax treaty in question. That brings us to the residuary head of income, dealing with 'other income', which is covered by article 22. Under Article 22 (1) of the Indo UAE tax treaty, "Subject to the provisions of paragraph (2), items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing Articles of this Agreement, shall be taxable only in that Contracting State". It is not even anyone's case that income has arisen here; the case is that the income has been invested here. In any event, the assessee is all along tax resident in UAE, and he does not undertake any economic activities in India. The unexplained investments, which are inherently in the nature of the application of income rather than earning of income, cannot thus be taxed in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement of capital. 7. Clearly, therefore, article 23(1) has no application in the present context. What is impugned before us is not a taxation on capital represented by an immoveable property but taxation on account of a part of investment in an immovable property being unexplained. Since a tax on capital is a tax on assets rather than a tax on income, wealth tax, which is covered by article 2(b)(iii) could at best be covered by the same, but that aspect of the matter is not even relevant in the present context. 8. Coming to the plea, embedded in the ground of appeal, that the "Indo UAE tax treaty provides for taxability of the income only not the computation of income, which falls in the domain of IT Act, 1961", we see no merits in this plea either. Classification of an income and taxation of an income is inherent part of the treaty mechanism, and unless an income fits in the treaty description of that income, it cannot be subjected to tax as such. 9. The interplay between the treaty and domestic law, as being sought to be canvassed by the revenue authorities, is alien to the treaty taxation mechanism. 10. As a matter of the fact that the ground of appeal itself states th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentative when he states that the related entry "probably" refers to interest receipt. The taxability of interest is, even by the standards of the revenue authorities, also thus far from established. There is no evidence whatsoever, or even a serious allegation, that there is an interest income. 14. Learned counsel, however, has much more armoury in defence of the conclusions arrived at by the learned CIT(A). It is his case that all investments in India are duly accounted for, and what is being said to unaccounted is a pure figment of imagination based on material which cannot meet any judicial scrutiny. Learned counsel invites our attention to certain nuances of the domestic tax law jurisprudence and submits, no matter how politely and in a subtle manner though, that even under the basic provisions of domestic law, the amounts in question could not be brought to tax, and there is thus no occasion to even look at the treaty provisions. He submits that the assessee was not confronted with the material on the basis of which the impugned additions are made and that the assessee was not given an opportunity to cross-examine the person from whom the alleged incriminating material was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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