ITO (IT)-3(1), MUMBAI V. ASHADEVI GOENKA, MUMBAI

ITA 3565/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1753 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM GAUR
• Keywords: Double taxation relief; Advance ruling; Reassessment proceedings; Set aside; Capital Gains

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI B. RAMAKOT AIAH,(AM) ITA NO.3565/MUM/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER(INTL. TAXATION)-3(1) ROOM NO.114, SCINDIA HOUSE BALLARD PIER MUMBAI-400 038. ..( APPELLANT ) VS. SMT. ASHADEVI GOENKA 5-D, SHANAZ 90, NAPEANSEA ROAD MUMBAI-400 006. ..( RESPONDENT ) P.A. NO. (AATPG 7778 E) APPELLANT BY : SHRI VIKRAM GAUR RESPONDENT BY : SHRI SU NIL HIRAWAT O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 31.3.2009 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2006-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THAT ASSESSEE AN INDIVIDUAL FILED RETURN OF INCOME DECLARING TOTAL INCO ME AT RS.74930/-. THE RETURN WAS PROCESSED UNDER THE PROVISIONS OF SECTION 1 43(1) OF THE INCOME TAX ACT, 1961 (THE ACT) WHEREIN THE RETURNED I NCOME HAS BEEN ACCEPTED. SUBSEQUENTLY, IT WAS NOTICED THAT THE ASSESSEE H AD ITA NO.3565/M/09 A.Y:06-07 2 DECLARED SHORT TERM CAPITAL GAINS OF RS.3,28,34,726/- BU T HAD CLAIMED EXEMPTION RELYING ON ARTICLE 13(3) OF THE INDO-UAE DTAA WHICH THE ASSESSEE WAS NOT ENTITLED TO IN VIEW OF THE RULING OF T HE AUTHORITY FOR ADVANCED RULING IN THE CASE OF CYRIL EUGENE PEREIRA AN D ABDUL RAZAK MEMON. NOTICE U/S.148 OF THE ACT WAS ISSUED. IN RESPONSE, THE ASSESSEE FILED RETURN OF INCOME DECLARING THE SAME TOTAL I NCOME AT RS.74,930/- CLAIMING EXEMPTION OF CAPITAL GAINS OF RS.3, 28,34,726/- RELYING ON ARTICLE 13(3) OF THE INDO-UAE DTAA. DURI NG THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO STATE AS TO W HY THE BENEFITS OF INDO-UAE DTAA SHOULD NOT BE DENIED. IN REPLY, IT WAS STATED THAT THE ASSESSEE HAS BEEN RESIDING IN DUBAI FOR TH E PAST 7 TO 8 YEARS AND HENCE, SHE IS A RESIDENT OF UAE AND THAT TAX LIABILITY SHOULD BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE UAE TREATY. THE RELIANCE WAS ALSO PLACED ON THE DECISION OF THE AUTHORITY FOR ADVANCE RULING (AAR) IN THE CASE OF M.A. RAFIQ 213 ITR 317. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE CANNOT BE CONSIDERED AS A TAX RESIDENT OF UAE AND CONSEQUENTLY THE ASSESSEE IS NOT ENTITLED TO THE BENEFITS OF DTAA. ACCORDING TO TH E ASSESSING OFFICER, THE ASSESSEE IS NOT A TAXABLE ENTITY IN UAE AND THE ASSESSEE IS NOT LIABLE TO TAX IN UAE AND NATURALLY SHE WILL NOT BE A TAX RESIDENT OF UAE AS DEFINED IN ARTICLE 4 OF THE DTAA BETWEEN INDI A-UAE. THE ASSESSING OFFICER HAS RELIED ON THE DECISION OF THE AAR IN CYRIL EUGENE ITA NO.3565/M/09 A.Y:06-07 3 PEREIRA 239 ITR 650 AND ALSO IN THE CASE OF ABDUL RAZA K MEMON 276 ITR 306 (AAR). ON APPEAL, THE LD. CIT(A) WHILE OBSER VING THAT THE ISSUE IS COMPLETELY COVERED IN FAVOUR OF THE APPELLANT I N THE CASE OF ASTT. DIT VS. GREEN EMIRATE SHIPPING & TRAVELS 100 ITD 203 (MUM.) AND AFTER CONSIDERING VARIOUS DECISIONS AND THE CIRCULAR H ELD THAT THE APPELLANT IS ENTITLED FOR THE BENEFITS OF DTAA BETWEE N INDIA AND UAE AND ACCORDINGLY THE APPELLANT IS NOT LIABLE TO PAY ANY TAX ON THE SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS EARNE D FROM THE TRANSFER OF SECURITIES IN INDIA. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN : (I) HOLDING THAT THE ASSESSEE, A RESIDENT OF THE U AE, IS ENTITLED TO THE BENEFITS OF DTAA BETWEEN INDIA A ND UAE; (II) HOLDING THAT THE ASSESSEE IS NOT LIABLE TO PA Y ANY TAX ON THE SHORT TERM CAPITAL GAINS EARNED IN I NDIA. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT O F THE ASSESSING OFFICER RESTORED. 4. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED T HAT THE IMPUGNED ISSUE IS COVERED AGAINST THE REVENUE AND IN FA VOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE 'S HUSBAND IN ITO VS. SHRI RAMESHKUMAR GOENKA IN ITA ITA NO.3565/M/09 A.Y:06-07 4 NO.3562/MUM/2009 FOR THE ASSESSMENT YEAR 2006-07 ORDER DATED 16 TH APRIL, 2010. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PL ACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL. 5. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL P ARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND MER IT THAT THE TRIBUNAL IN SHRI RAMESHKUMAR GOENKA (SUPRA), ON THE SI MILAR FACTS AND CIRCUMSTANCES OF THE CASE AND ON THE SIMILAR GROUNDS RA ISED BY THE REVENUE IN THAT CASE AFTER FOLLOWING THE DECISION IN ASSISTANT DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION), RANG E 1(2) VS. GREEN EMIRATE SHIPPING & TRAVELS (2006) 100 ITD 203 (MUM) HAS HELD VIDE PARA-9 OF ITS ORDER AS UNDER :- .IN OUR VIEW DECISION IN THE CASE OF GREEN EMIRATE SHIPPING & TRAVELS (SUPRA), IS SQUARELY APP LICABLE TO THE FACTS OF THE PRESENT CASE. AS HELD IN THE A FORESAID CASE, EXPRESSION LIABLE TO TAX IN THE CONTRACTING STATE AS USED IN ARTICLE 4(1) OF INDO-UAE-DTAA DOES NOT NECESSARILY IMPLY THAT THE PERSON SHOULD ACTUALLY B E LIABLE TO TAX IN THAT CONTRACTING STATE AND THAT IT IS ENO UGH IF OTHER CONTRACTING STATE HAS RIGHT TO TAX SUCH PERSO N, WHETHER OR NOT SUCH A RIGHT IS EXERCISED. IN THE L IGHT OF THE RATIO LAID DOWN IN THE AFORESAID DECISION, WHIC H HAS BEEN FOLLOWED BY CIT(A), WE FIND NO GROUNDS TO INTE RFERE WITH THE ORDER OF CIT(A). WE THEREFORE CONFIRM THE ORDER OF CIT(A) AND DISMISS THE APPEAL BY THE REVENUE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKIN G THE ADDITION OF SHORT TERM CAPITAL GAINS OF RS.3,28,34,726/- IN THE INCOME OF THE ITA NO.3565/M/09 A.Y:06-07 5 ASSESSEE AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FIN DING OF THE LD. CIT(A) IN DELETING THE SAME. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. 6. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.6.2010. SD/- SD/- (B. RAMAKOTAIAH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED:11.6.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.