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TMI Blog2008 (10) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... at income may be taxed in both the countries, they have specifically so provided. Hence, the contention of the Revenue that the expression may be taxed in other State gives the option to the other State and the State of residence is not precluded from taxing such income cannot be accepted. Therefore, it is held that the assessee cannot be taxed in respect to the sum under the provisions of the IT Act, 1961 in view of the overriding provisions of DTAA between India and Canada. The order of the CIT(A) sustaining the addition is set aside and consequently, the AO is directed to exclude the same from the total income of the assessee. Appeal is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... , the decision of the Supreme Court relied on by the assessee's counsel is quite distinguishable. On the contrary, she relied on the decision of the Authority for Advance Rulings in the case of S. Mohan, In re (2007) 212 CTR (AAR) 100 : (2007) 294 ITR 1 77 (AAR) wherein the expression 'may be taxed' was construed and it was held that such words did not preclude the Contracting States of residence to tax the same if the assessee was liable to tax under the domestic law. According to this judgment, the assessee was only entitled to double taxation relief if the tax has been paid in the source country. It was also submitted by her that the decision of the Supreme Court in P.V.A.L. Kulandagan Chettiar (Dead) Through LRs case was held to be distinguishable by AAR by observing that the Supreme Court did not express any opinion regarding the scope of the expression "may be taxed". Proceeding further, it was submitted by her that Indo-Canada treaty is similar to OECD Model Convention and, therefore, its meaning should be understood as per the OECD Commentary. Proceeding further, it was submitted that there are two categories of treaties. According to one category, the relief is provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtainer or the athlete is directly or indirectly supported, wholly or substantially, from the public funds of the other Contracting State, including any political sub-division, local authority or statutory body of that other State." The perusal of the para 1 which is relevant for disposal of this appeal shows that where an artist performs an entertainment show in the other Contracting State then, the profits may be taxed in such Contracting State. 6. The contention of the Revenue is that the expression "may be taxed" in para 1 in art. 18 gives only an option to the other Contracting State to tax the income but it does not preclude the Contracting State of residence to assess the said income. According to her, this contention finds support from the provisions of art. 23 which provides relief with reference to tax paid or deducted at source in the source State. Reliance is placed on the decision of the AAR in S. Mohan. In re case. On the other hand. the contention of the assessee is that such expression authorizes only the Contracting State of source to tax such income and by necessary implication the Contracting State of residence is precluded from taxing such income. Reliance is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracting States to tax such income. In our view, the contextual meaning has to be given to such expression, if the contention of the Revenue is to be accepted then the specific provisions permitting both the Contracting States to levy the tax would become meaningless. The conjoint reading of all the provisions of articles in Chapter III of Indo-Canada treaty, in our humble view, leads to only one conclusion that by using the expression "may be taxed in the other State", the contracting parties permitted only the other State, i.e., State of income source and by implication, the State of residence was precluded from taxing such income. Wherever the contracting parties intended that income may be taxed in both the countries, they have specifically so provided. Hence, the contention of the Revenue that the expression "may be taxed in other State" gives the option to the other State and the State of residence is not precluded from taxing such income cannot be accepted. 8. The reliance of the Revenue on art. 23 is also misplaced. It has been contented that art. 23 gives credit of tax paid in the other State to avoid double taxation in cases like the present one. In our opinion, such pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on behalf of the assessees, when referring to an obvious position such enabling form of language has been liberally used and the same cannot be taken advantage of by the Revenue to claim for it a right to bring to assessment the income covered by such clauses in the agreement, and the mandatory form of language has been used only where there is room or scope for doubts or more than one view possible, by identifying and fixing the position and placing it beyond doubt." Since the above decision has been affirmed by the apex Court, there is no scope for taking a different view. We are aware of the fact that the apex Court observed that the decision of the Madras High Court was being affirmed for different reason but the conclusion remains that income cannot be assessed in the State of residence where the agreement provides that income may be taxed in the source country. In this context, it is pertinent to observe that the identical issue arose before the Hon'ble Madhya Pradesh High Court in the case of Dy. CIT vs. Torqouise Investment & Finance Ltd. (2006) 202 CTR (MP) 395 : (2008) 299 ITR 143 (MP) and the Court, following the decision of the Madras High Court in the case of VR.S.R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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