Venkatesh Karriers Ltd., Goa V. The Director Of Inome-Tax, (IT), Bangalore

ITA 88/PAN/2011

• Counselvise Citation: 8824114 RSA 2011
• Duration Of Justice: 2 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 19-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Double taxation relief; Advance ruling
• Section: 263; 63; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 88/PNJ/2011 : (ASST. YEAR : 2008 - 09) VENKATESH KARRIERS LIMITED (AS AGENT FOR USL SHIPPING FZE, UAE) VESSEL - MV JU FU MEN 5GH, QUEENY ELITE BUILDING, 5 TH FLOOR, SWATANTRA PATH, VASCO DA GAMA, GOA PAN : AAACV2738B (APPELLANT) VS. THE DIRECTOR OF INCOME TAX, (INTERNATIONAL TAXATION) NO. 14/3A, RASHTROTHANA PARISHAD BHAVAN, NRUPATHUNGA ROAD, BANGALORE (RESPONDENT) APPELLANT BY : MAHESH P. SARDA , C.A RESPONDENT BY : SMT. ASHA DESAI, DR DATE OF HEARING : 01 /0 7 /2013 DATE OF PRONOUNCEMENT : 25 /07/2013 O R D E R PER P.K. BANSAL : 1. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF DIT(INTL. TAX.) DT. 25.2.2011 PASSED U/S 263 OF THE INCOME TAX ACT BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1. THE ORDER U/S. 263 IS BAD IN LAW. 2. THE LEARNED DIT (INTERNATIONAL TAXATION) FAILED TO APPRECIATE THAT THE ORDER SOUGHT TO BE REVISED IS AN ORDER U/S. 172(4) R.W.S. 264 - AND THE SAME CANNOT BE SUBJECTED TO REVISION U/S 263; 3. THE LEARNED DIT (INTERNATIONAL TAXATION) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THE ORDER PASSED BY THE A.O. U/S. 172(4) RWS 264 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE REVENUE. 2 ITA NO. 88/PNJ/2011 (ASST. YEAR : 2008 - 09) 4. THE LEARNED DIT (INTERNATIONAL TAXATION) FAILED TO APPRECIATE THAT THE ORDER U/S. 172(4) R.W.S. 264 - 4.1 WAS P ASSED BY THE AO AFTER TAKING INTO CONSIDERATION THE ISSUES / POINTS ON WHICH THE REVISION WAS PROPOSED; 4.2 CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WHERE IT WAS PASSED AFTER APPLICATION OF MIND BY THE AO AND THE VIEW TAKEN BY THE A O WAS SUPPORTED BY THE JUDGEMENT OF THE APEX COURT AND THE BOARD CIRCULARS. 5. THE LEARNED DIT (INTERNATIONAL TAXATION) HAS ERRED IN HOLDING THAT THE APPELLANT WAS NOT ENTITLED TO ANY RELIEF UNDER THE DTAA BETWEEN INDIA AND UAE AS NO TAX WAS PAID IN UAE AND FURTHER ERRED IN DIRECTING THE A.O. TO DISALLOW THE CLAIM OF DTAA EXEMPTION EXERCISING THE POWERS U/S. 263 OF THE ACT. 2. THIS APPEAL HAS BEEN DISPOSED OFF BY THIS TRIBUNAL VIDE ITS ORDER DT. 29.7.2011 AGAINST WHICH THE ASSESSEE FILED APPEAL U/ S 268 BEFORE THE HON'BLE HIGH COURT OF BOMBAY AT GOA PANAJI. THE HON'BLE HIGH COURT VIDE ITS ORDER DT. 7.3.2012 IN T.A. NO. 1 OF 2012 QUASHED AND SET ASIDE THE ORDER PASSED BY THE ITAT, PANAJI BENCH AND REMITTED THE ITA NO. 88/PNJ/2011 TO THE ITAT WITH TH E DIRECTION THAT THE ITAT SHALL PASS A FRESH ORDER AFTER HEARING BOTH THE ASSESSEE AS WELL AS THE REVENUE AND WITHOUT BEING INFLUENCED BY ANY OF THE FINDINGS AND CONCLUSIONS OF ITS EARLIER ORDER. ALL CONTENTIONS ON MERIT ARE KEPT OPEN. ACCORDINGLY, THE A PPEAL WAS FIXED FOR HEARING AND ULTIMATELY THE HEARING WAS COMPLETED ON 1.7.2013. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SUBMITTED RETURN U/S 172( 4 ) OF THE INCOME TAX ACT FOR VESSEL MV JU FU MEN FOR THE A.Y 2008 - 09 ON 10.6.2007 CLAIMING RE LIEF UNDER DTA A BETWEEN INDIA AND THE U.A.E AND ACCORDINGLY, NO TAX WAS PAYABLE. THE AO PASSED ORDER U/S 172(4) DT. 2.12.2008 IN A SUMMARY MANNER AND RAISED DEMAND OF RS.6,79,945/ - BY DISALLOWING RELIEF CLAIMED ON ACCOUNT OF INDO - UAE TREATY. THE ASSESSEE SUBSEQUENTLY MADE AN APPLICATION U/S 264 ON 23.2.2009. THE DIT(IT), BANGALORE SET ASIDE THE ORDER PASSED U/S 172(4) VIDE HIS ORDER DT. 15.10.2009 WITH A DIRECTION TO PASS A FRESH 3 ITA NO. 88/PNJ/2011 (ASST. YEAR : 2008 - 09) ORDER AFTER GIVING OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE, ACCORDINGLY SUBMITTED DETAILED SUBMISSION DURING THE COURSE OF PROCEEDINGS U/S 172(4) R/W SECTION 264. THEREAFTER, THE AO PASSED ORDER U/S 172(4) R/W SEC. 264 DT. 3 . 2 .2010 CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE BOARD CIRCULAR NO. 333 DT. 2.2.1982 AND CIRCUL AR NO. 732 DT. 20.12.1995 AND THE DECISION OF THE APEX COURT IN AZADI BACHAO ANDOLAN AND ORS. REPORTED IN 263 ITR 706, JUDGEMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF EMMERICH JAEGAR VS CIT 274 ITR 125 AND THAT OF ITAT, MUMBAI BENCH IN THE CASE OF G REEN EMIRATES SHIPPING AND TRAVELS REPORTED IN 99 TTJ 988 AND ALLOWED THE RELIEF TO THE ASSESSEE FOR RS.6,79,945/ - . SUBSEQUENTLY, THE CIT (INTERNATIONAL TAXATION), BANGALORE CALLED FOR THE RECORD AND TOOK THE VIEW THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE VERY OBJECT OF THE DTAA HAS ESCAPED ATTENTION OF THE AO WHILE PASSING THE ORDER. SHOW CAUSE NOTICE DT. 29.12.2010 WAS ACCORDINGLY ISSUED TO THE ASSESSEE. IN RESPONSE THERETO, THE ASSESSEE OBJECTED THE PROPOSED ACTION INVOKING THE PROVISIONS OF SEC. 263 BY THE CIT( IT ) BY MAKING A DETAILED SUBMISSION ON LEGAL AS WELL AS ON MERIT. THE C IT(IT) , BANGALORE REJECTED THE PLEA OF THE ASSESSEE AS WELL AS APPLICABILITY OF THE JUDGEMENT OF HON'BLE GUJARAT HIGH COURT AS ACCORDING TO HIM, NO TWO VIEWS WERE POSSIBLE IN THIS CASE. THE CIT IN HIS ORDER MADE U/S 264 RE QUIRED THE AO TO PASS A SPEAKING ORDER GIVING REASONS IN THE ORDER PASSED BY HIM FOR NOT ALLOWING RELIEF UNDER DTAA BETWEEN GOVERNMENT OF INDIA AND GOVERNMENT OF UAE AS CLAIMED BY THE ASSESSEE AND ACCORDING TO HIM THERE WAS NO DIRECTION TO THE AO THAT HE S HOULD ACCEPT THE CLAIM OF THE ASSESSEE. THE CIT WAS ALSO OF THE VIEW THAT THE CASES REFERRED TO BY THE ASSESSEE WERE NOT APPLICABLE. HE RELIED ON THE DECISION OF THE AUTHORITY FOR ADVANCE RULING IN THE CASE OF CYRIL EUGENE PEREIRA 239 ITR 650 (AAR) . HE ENTERTAINED THE VIEW THAT NEITHER U/S 9 0 N OR U/S 91 OF THE ACT HAS ANY ATTEMPT BEEN MADE TO GRANT RELIEF WHERE THERE IS NO LAW IN FORCE IN A FOREIGN COUNTRY, SUBJECTING TO TAX THE SAME INCOME WHICH IS TAXABLE UNDER THE INCOME TAX ACT. 4 ITA NO. 88/PNJ/2011 (ASST. YEAR : 2008 - 09) IT IS NOT THE CASE OF THE ASSESSEE THAT HE HAS PAID TAXES IN UAE. THE AGREEMENT IS NOT AN INSTRUMENT TO GRANT RELIEF EVEN IN CASE OF TAXATION OF INCOME BY ONLY ONE COUNTRY AND THERE IS NO TAXATION OF THAT INCOME BY ANOTHER COUNTRY. THUS, HE WAS OF THE CO NSIDERED VIEW THAT THE ORDER PASSED U/S 172(4) R/W SEC. 264 OF THE ACT BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SEC. 263 AND ASSESSEE WAS NOT ENTITLED TO ANY RELIEF UNDER DTAA BETWEEN INDIA AND UAE AS NO TAX WAS PAID BY THE FO REIGN SHIPPING COMPANY IN UAE AND HE DIRECTED THE AO NOT TO ALLOW ANY RELIEF UNDER DTAA. 3.1 THE LD. AR BEFORE US VEHEMENTLY CONTENDED THAT THERE WAS NO ERROR IN THE ORDER PASSED BY THE AO ALLOWING THE RELIEF TO THE A SSESSEE. CIT RELIED MERELY ON THE DECISION OF AUTHORITY FOR ADVANCE RULING REPORTED IN 239 ITR 650 AND DIRECTED THE AO NOT TO ALLOW THE CLAIM OF THE ASSESSEE AND THERE OCCURRED AN ERROR. THE ASSESSEE IS ENTITLED FOR THE BENEFIT UNDER ARTICLE 8 OF THE DTA A. THE SAID VERY DECISION REPORTED IN 239 ITR 650 HAS DULY BEEN CONSIDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF AZADI BACHAO ANDOLAN & ORS. R EPORTED IN 263 ITR 706 ( SUPRA ) AND THE HON'BLE SUPREME COURT HAS OVERRULED THE DECISION OF THE AUTHORITY FO R ADVANCE RULING. OUR ATTENTION WAS DRAWN TOWARDS THE DECISION OF AZADI BACHAO ANDOLAN, SPECIALLY PARA 60, 64, 68, 72 & 76 OF THE SAID DECISION. THE HON'BLE SUPREME COURT REJECTED THE CONTENTION THAT SINCE THE PURPOSE OF THE DTAA IS TO ELIMINATE DOUBLE T AXATION, THE TREATY TAKES INTO ACCOUNT ONLY PERSONS WHO ARE LIABLE TO TAXATION IN THE CONTRACTED STATES . THUS, ACCORDING TO HIM THERE IS NO ERROR IN THE ORDER OF THE AO. THE CIT HAS GROSSLY ERRED IN TAKING A VERY NARROW VIEW WHILE REJECTING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF AZADI BACHAO ANDOLAN BY STATING THAT THE SAID DECISION RELATES TO TAXATION OF CAPITAL GAINS WHEREAS THE ISSUE INVOLVED IN THIS CASE RELATE TO THE TAXATION OF SHIPPING PROFITS. FOR THIS, ATTENTION WAS DRAWN TOWAR DS PARA 60, 64, 68, 72 AND 76 OF THE ORDER. IT WAS ALSO POINTED OUT THAT IN 5 ITA NO. 88/PNJ/2011 (ASST. YEAR : 2008 - 09) THE CASE OF THE ASSESSEE , IN ITA NO S . 626 TO 63 5/RJT/2010, THE RAJKOT BENCH OF THIS TRIBUNAL FOR A.Y 2004 - 05, 2005 - 06 AND 200 7 - 08 HAS TAKEN THE SAME VIEW AS HAS BEEN TAKEN BY THE AO. THE FACTS INVOLVED IN THIS CASE ARE ALSO THE SAME. THE DECISION OF THE RAJKOT BENCH IN ITA NO 626/RJT/2010 HAS DULY BEEN APPROVED BY THE HON'BLE GUJARAT HIGH COURT IN DIT(IT) VS. V E NKATESH KARRIER LTD ., 19 TAXMANN.COM 291 IN WHICH ALSO IT WAS HELD THAT THE AGENT OF SHIPPING COMPANY RESIDENT OF UAE WAS NOT LIABLE TO TAX AS PER ARTICLE 8 OF THE DTAA IN INDIA. ATTENTION WAS ALSO DRAWN TOWARDS CIRCULAR NO. 333 DT. 2.2.1982, CIRCULAR NO. 732 DT. 20.12.1995 AND CIRCULAR NO. 789 DT. 13.4.2000. THUS, IT WAS CONTENDED THAT THERE WAS NO ERROR IN THE ORDER OF THE AO. EVEN OTHERWISE, THE CIT HAS EXCEEDED HIS JURISDICTION BECAUSE IF THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS, UNLESS THE VIEW TAKEN BY THE AO IS UN SUSTAINABLE IN LAW, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE AO IS ERRONEOUS. IN THIS REGARD, ATTENTION WAS DRAWN TOWARDS THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC). OUR ATTEN TION WAS ALSO DRAWN TOWARDS THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF EMMERICH JAEGAR VS. CIT 274 ITR 125 ( SUPRA ) IN WHICH IT WAS HELD THAT ON A PLAIN READING IT BECOMES APPARENT THAT THE CONDITION DOES NOT STIPULATE ACTUAL PAYMENT OF T AX. ALL THAT THE PROVISION PROVIDES IS THAT INDIVIDUAL SHOULD BE LIABLE TO TAX UNDER AUSTRIAN STATUTE. IN OTHER WORDS, THE AUSTRIAN STATUTE MUST BE SHOWN TO BE LEVYING TAX ON SUCH REMUNERATION. ATTENTION WAS ALSO DRAWN TOWARDS THE DECISION IN THE CASE OF ADIT VS. GREEN EMIRATES SHIPPING & TRAVELS , 99 TTJ (MUMBAI) 988 WHICH WAS DECIDED BY THE BOMBAY BENCH OF THE TRIBUNAL AFTER REFERRING TO THE DECISION OF ABDUL RAZAK & MENON, 276 ITR 306 (AAR) AND RELYING ON UNION OF INDIA VS. AZADI BACHAO ANDOLAN, 263 ITR 706 (SC) ( SUPRA ) . IT WAS CONTENDED THAT THE ORDER PASSED BY THE AO WAS NOT ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. DR SUPPORTED THE ORDER OF CIT. 6 ITA NO. 88/PNJ/2011 (ASST. YEAR : 2008 - 09) 3.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT THE JURISDICTION U/S 263 CAN BE EXERCISED BY THE COMMISSIONER OF INCOME TAX ON THE EXAMINATION OF THE RECORD FINDS THAT ANY ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE. AFTER MAKING NECESSARY INQUIRY, HE CAN PASS SUCH ORDERS AS THE CIRCUMSTANCES OF THE CAME JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. HOWEVER, SUCH ORDER CANNOT BE PASSED WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE. IN ORDER TO INVOKE JURISDICTION U/S 263, BOTH THE CONDITIONS I.E. ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ARE TO BE SATISFIED. THE ORDER CANNOT BE REGARDED TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE IF TWO VIEWS ARE POSSIBLE AS TO THE INTERPRETATION OF ANY PROVISION OF THE ACT AND THE AO WHILE PASSING THE ORDER ADOPTED VIEW FAVOURABLE TO THE ASSESSEE. THE HON'BLE SUPREME COURT IN THIS REGARD IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) HELD AS UNDER : THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LO SS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVEN UE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME TAX OFFICE R IS UNSUSTAINABLE IN LAW. IN THIS CASE, WE NOTED THAT THE VIEW TAKEN BY THE AO IS DULY SUPPORTED BY THE VIEW TAKEN BY THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN THE PRECEDING A.Y IN ITA NO. 626/RJT/2010 WHICH WAS CONFIRMED BY THE HON'BLE GUJARAT HIGH COURT VIDE ORDER DT. 20.3.2012 REPORTED IN 19 TAXMANN.COM 291 ( SUPRA ) . THE BOMBAY BENCH OF THIS TRIBUNAL HAS ALSO TAKEN A SIMILAR VIEW IN THE CASE OF ADIT VS. 7 ITA NO. 88/PNJ/2011 (ASST. YEAR : 2008 - 09) GREEN EMIRATES SHIPPING AND TRAVELS REPORTED IN 99 TTJ 988 ( SUPRA ) IN WHICH THE TRIBUNAL HAS HELD AS UNDER : TAXABILITY IN ONE COUNTRY IS NOT SINE QUA NON FOR AVAILING OF RELIEF UNDER THE TREATY ALL THAT IS NECESSARY IS THAT THE PERSON SHOULD BE LIABLE TO TAX IN THE CONTRACTING STATE BY REASON OF DOMICILE, RESIDENCE , PLACE OF MANAGEMENT, PLACE OF INCORPORATION OR ANY OTHER CRITERION OF SIMILAR NATURE WHICH ESSENTIALLY REFERS TO THE FISCAL DOMICILE OF SUCH PERSON IF FISCAL DOMICILE OF A PERSON IS IN A CONTRACTING STATE, HE IS TO BE TREATED AS RESIDENT OF THAT CONTRA CTING STATES, IRRESPECTIVE OF WHETHER OR NOT THAT PERSON IS ACTUALLY LIABLE TO PAY TAX IN THAT COUNTRY LIABLE TO TAX IN THE CONTRACTING STATE DOES NOT NECESSARILY IMPLY THAT THE PERSON SHOULD ACTUALLY BE LIABLE TO TAX IN THAT CONTRACTING STATE BY VIRTU E OF AN EXISTING LEGAL PROVISION BUT WOULD ALSO COVER THE CASES WHERE THE OTHER CONTRACTING STATE HAS THE RIGHT TO TAX SUCH PERSON, WHETHER OR NOT SUCH A RIGHT IS EXERCISED. EVEN THE VIEW TAKEN BY THE AO IS DULY SUPPORTED BY THE DECISION OF THE HON'BLE G UJARAT HIGH COURT IN THE CASE OF EMMERICH JAEGAR VS CIT, 274 ITR 125 ( SUPRA ) IN WHICH THE HON'BLE GUJARAT HIGH COURT HAS HELD AS UNDER : CLAUSE (1) OF ARTICLE XIV OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN AUSTRIA AND INDIA PROVIDES THAT PROFITS OR REMUNERATION FROM PROFESSIONAL SERVICES OR FROM SERVICES AS AN EMPLOYEE DERIVED BY AN INDIVIDUAL WHO IS RESIDENT OF AUSTRIA MAY BE TAXE D IN INDIA ONLY IF SUCH SERVICES ARE RENDERED IN INDIA. HOWEVER, CLAUSE (2) OF ARTICLE XIV CARVES OUT AN EXCEPTION, IN SUCH CIRCUMSTANCES, AND LAYS DOWN FOUR CONDITIONS WHICH ARE REQUIRED TO BE FULFILLED BEFORE AN INDIVIDUAL WHO IS OTHERWISE HELD TO BE LI ABLE TO TAX UNDER THE ACT IN INDIA IS NOT TO BE TAXED IN INDIA. SUB - CLAUSE (C) STATES THAT THE PROFITS OR REMUNERATION ARE SUBJECT TO AUSTRIAN TAX. ON A PLAIN READING, IT BECOMES APPARENT THAT THE CONDITION DOES NOT STIPULATE ACTUAL PAYMENT OF TAX. ALL THAT THE PROVISION PROVIDES IS THAT THE INDIVIDUAL SHOULD BE LIABLE TO TAX UNDER THE AUSTRIAN STATUTE. IN OTHER WORDS, THE AUSTRIAN STATUTE MUST BE SHOWN TO BE LEVYING TAX ON SUCH REMUNERATION. BEING LIABLE TO TAX AND BEING ACTUALLY TAXED ARE TWO DIFFERE NT THINGS, AND IN A GIVEN SITUATION, IT IS ALWAYS POSSIBLE, THAT A PERSON MAY BE LIABLE TO TAX UNDER A STATUTE, BUT MAY NOT BE ACTUALLY TAXED BY VIRTUE OF SOME OTHER PROVISION UNDER THE SAME STATUTE. WE ALSO NOTED THAT EVEN THE HON'BLE SUPREME COURT IN T HE CASE OF UNION OF INDIA VS. AZADI BACHAO ANDOLAN & ORS. REPORTED IN 263 ITR 706 ( SUPRA ) IN RESPECT OF THE DTAA WITH MAURITIUS TOOK A SIMILAR VIEW BY OBSERVING AS UNDER : 8 ITA NO. 88/PNJ/2011 (ASST. YEAR : 2008 - 09) THE TEST OF LIABILITY FOR TAXATION IS NOT TO BE DETERMINED ON THE BASIS OF AN EXEM PTION GRANTED IN RESPECT OF ANY PARTICULAR SOURCE OF INCOME, BUT BY TAKING INTO CONSIDERATION THE TOTALITY OF THE PROVISIONS OF THE INCOME - TAX LAW THAT PREVAILS IN EITHER OF THE CONTRACTING STATES. MERELY BECAUSE, AT A GIVEN TIME, THERE MAY BE AN EXEMPTIO N FROM INCOME - TAX IN RESPECT OF ANY PARTICULAR HEAD OF INCOME, IT IS NOT CORRECT TO SAY THAT THE TAXABLE ENTITY IS NOT LIABLE TO TAXATION. LIABILITY TO TAXATION IS NOT THE SAME AS PAYMENT OF TAX. LIABILITY TO TAX IS A LEGAL SITUATION: PAYMENT OF TAX IS A FISCAL FACT. IT CANNOT BE SAID THAT OFFSHORE COMPANIES INCORPORATED IN MAURITIUS AND REGISTERED UNDER THE MAURITIUS OFFSHORE BUSINESS ACTIVITIES ACT, 1992, ARE NOT LIABLE TO TAXATION UNDER THE MAURITIUS INCOME - TAX ACT; OR THAT SUCH COMPANIES WOULD NOT BE RESIDENT IN MAURITIUS WITHIN THE MEANING OF ARTICLE 3 READ WITH ARTICLE 4 OF THE CONVENTION. IN VIEW OF THE AFORESAID SETTLED POSITION OF LAW, IT CANNOT BE SAID THAT THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. THE VIEW TAKEN BY THE AO IS THE VI EW WHICH IS DULY SUPPORTED BY THE DECISION OF THE TRIBUNAL, THE HIGH COURT AS WELL AS THE SUPREME COURT. THUS, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE AO IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, WE QUASH THE O RDER OF CIT. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 5. ORDER PRONOUNCED IN THE OPEN COURT ON 25 /07/2013. SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 25 /07/ 2013 *SSL* 9 ITA NO. 88/PNJ/2011 (ASST. YEAR : 2008 - 09) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA