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2022 (3) TMI 1419 - AT - Income TaxBenefit of tax credit - whether exemption to dividend was granted to dividends with a view to promote economic development and consequently holding that the assessee was entitled to tax credit under Article 25(4) of the DTAA? - ITAT had accepted the letter of Secretary General of taxation that interpreted the Article 25(4) of DTAA which is within the domain of two Governments and thus inserted words “designed for economic development” in Omani Tax Law - as per revenue F.A.A. has failed to take note of correct position of law and gave benefit to the assessee on the basis of letter of Secretary General of Taxation - HELD THAT:- As letter of Secretary General of Taxation, which goes to the core of controvery, it was observed in para no. 26 that the clarification given by Secretary General of Taxation has to be regarded as conclusive. If the tax authorities had any doubts they could not have proceeded to elevate them into findings, but rather addressed them to Omani Authorities, if not directly then through Indian Diplomatic Channels. In not doing so, but proceeding to interpret the laws and the certificate of Omani Authorities, the revenue, specially the Commissioner fell into error. In assessee’s own case of AY 2010-11 [2016 (11) TMI 1360 - ITAT DELHI] a Cordinate Bench has held “It is seen from the assessment orders u/s.143(3) for the assessment years 2008-09 to 2009- 10 that the Revenue had consistently adopted the view that the assessee is entitled to tax credit on the deemed dividend which would have been payable in Oman. The Revenue had taken a conscious view after considering the provisions of the Omani Tax Laws, Section 90 of the I.T. Act, Article-25 of the DRAA and the clarifications issued by the Royal decree of the Omani Government. Copies of the assessment orders for A.Ys. 2007-08 to 2009- 10 have been placed before us from pages 495 to 558 of the Paper Book. On perusal of the same, it is seen that the Revenue has, after thoroughly examining the issues on hand and examining the provisions, considered the dividend income as exempt.” Thus, this bench of considered opinion that matter rests at peace in regard to these grounds no. 1, 2 & 3 by assessee’s own case for the assessment year 2010-11, accordingly these grounds are decided against the revenue. Disallowance/reallocation of interest under section 36(1 )(iii) under the head Work-in-capital/ Investments - application of debt-equity ratio for calculation of interest to be capitalised/disallowed on addition made to fixed assets and capital work in progress and amount of investment - HELD THAT:- As in appellant’s own case for assessment year 2010-11 [2016 (11) TMI 1360 - ITAT DELHI] Closing CWIP and Investments (excluding GOI Bonds issued in lieu of Subsidy in the nature of Trade Receivable ) are less than the Own Funds available with the assessee, thus no amount of Interest on such borrowings can be notionally disallowed under Section 36(l)(iii). Revenue appeal dismissed.
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