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2016 (4) TMI 526 - HC - Income TaxReopening of assessment against the partnership firm based in the UK - Indo-UK treaty - whether partners of the firm had fiscal domicile offshore - noticee to be a person covered by the treaty - Held that:- Similar situation was dealt with in P & O Nedlloyd Ltd. & Ors. (2014 (11) TMI 564 - CALCUTTA HIGH COURT ) where this Court held the noticee to be a person covered by the treaty. Applying that decision to the facts of this case the noticee stands covered by the treaty as a person thereunder and being an enterprise of a Contracting State, taxable only in that State. This court is unable to take a different view than the one already taken P & O Nedlloyd Ltd. & Ors. (supra) on this issue as persuaded by the submissions made on behalf of the petitioners. Partnerships are not taxed in the UK, be it a partnership based there or here in India. Only partnerships established in the UK are required to file a return there as noted above. On the other hand, where a partnership based in the UK is treated as a person under domestic law as its income exigible to tax thereunder, it follows that paragraph 2 of Article 3 of the convention is to be given an interpretation so as to benefit such a partnership based in the UK which since not taxed under the laws there might be treated as liable to tax in India. Mr. Chakraborty had fairly submitted that there was a subsequent amendment made to the treaty and duly notified whereby similar issue would not arise in future against the noticee. Thus the noticee is a person covered under the treaty and being an enterprise of the UK, the same has fiscal domicile in the UK where it is based. Its income from operation of ships in international traffic is not exigible to tax under domestic law. Consequently the impugned notices are set aside and the writ petitions disposed of. - Decided in favour of assessee
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