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2008 (10) TMI 251 - AT - Income TaxDouble Taxation Relief - Whether the sum received by the assessee on account of her performance in Canada can be taxed in India in view of the provisions of art. 18 of Indo-Canada treaty? - tax was also deducted at source in Canada - assessee was a resident of India - HELD THAT:- We are of the view that income derived by the assessee from the exercise of her activity in Canada is taxable only in source country, i.e., Canada for the reasons given hereafter. The scheme of taxation of income is contained in Chapter III of DTAA/Indo-Canada treaty. The conjoint reading of all the provisions of articles in Chapter III of Indo-Canada treaty, 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. 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.
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