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TMI Blog2010 (10) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the benefit of Indo-UAE Double Taxation Avoidance Agreement [205 ITR (St) 49]. This issue is set out in a very narrow compass of undisputed facts. The assessee before us is a resident of United Arab Emirates and is fiscally domiciled in the UAE. On this basis, the assessee has claimed protection of Indo-UAE Double Taxation Avoidance Agreement. In terms of Article 8 of Indo-UAE Double Taxation Avoidance Agreement, the profits derived by the assessee, who is engaged in the business of shipping, are taxable in the jurisdiction, in which the assessee is fiscally domiciled. The reason on account of which this claim has been declined by the Assessing Officer is that the assessee is not liable to pay taxes in UAE and since the assessee does not have any tax liability in UAE, according to the Assessing Officer, the assessee is not eligible to claim treaty protection from taxability in India in terms of Indo UAE DTAA. In other words, the AO has proceeded on the basis that the taxability in UAE is sine quo non for claiming the benefits of Indo UAE DTAA by a UAE resident in India. However, when the matter traveled before the CIT (A), the CIT (A) reversed the action of the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e imposes a tax in the situation to which exemption implies . In the case of John N. Gladden vs. 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 from capital gains in that country It is thus clear that taxability in one country is not sine qua non for availing relief under the treaty from taxability in the other Courts. All that is necessary for this purpose is that the person should be liable to tax in the Contracting State by reason of domicile, residence, place of management, place of incorporation for any other criterion of similar nature which essentially refers to the fiscal domicile of such a person. In other words, if fiscal domicile of a person is that person is actually liable to pay tax in that country, he is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Co-ordinate Bench. Respectfully, following the same, grievance of the assessee must be upheld. It would perhaps also be appropriate to add a few lines on the developments post the said decision in the case of Green Emirate Shipping Travels (supra). 6. The view taken by the Tribunal in the case of Green Emirate Shipping Travels (supra) of the Tribunal has also been confirmed, a few months later, by a Dutch High Court vide judgment dt. 15th Feb., 2006. We consider it appropriate to reproduce the observations made by late Prof. Klaus Vogel in the Bulletin for International Taxation (Volume 60, No. 6-2006 at pp. 218-219) published by the International Bureau of Fiscal Documentation, Amsterdam. Prof. Dr. Klaus Vogel, after referring to the Tribunal decision in the case of Green Emirate Shipping Travels (supra), had observed as follows : An unusual case decided by the Dutch Gerechtsh of Amsterdam Court of appeals on 15th Feb., 2006 confirms this decision. The owners of the Dutch company, XBV emigrated from the Netherlands to Greece in 1995 and advised the Dutch tax authorities that they now exercised management and contract from their new location, as a consequence of which the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These things taken together, viewed in perspective discussed above, also persuade us not to take any other view of the than the view so taken by the Tribunal in the case of Green Emirate Shipping Travels (supra). 8. While concluding the aforesaid decision, the Tribunal had made the following observations : Before parting with the matter, we may add that instead of allowing such matters, as is the dispute before us, be subjected to confusing signals resulting in uncertainty and prolonged litigation, certainly more desirable for the Government to take a clear-cut stand on the issue or let the be resolved at the level of Governments of the Contracting States. That perhaps is a better solution for quickly resolving the disputes on such a fundamental aspect of a tax treaty as to who will eligible for the benefits of that tax treaty. We hope Government will resolve this matter once and would not allow that uncertainty to last for long. 9. We have noted that a successful initiative has indeed been made to resolve this issue level of the Contracting States. On 6th March, 2007, a protocol, amending the Indo-UAE tax has been entered into. This protocol has since been notified by the Governme ..... 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