TMI Blog2006 (3) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... as rejected by the AO. The assessee had sought to cover its case under the expression "any other activity directly connected with such transportation" appearing in art. 8(3) of the DTAA. According to the CIT(A), this view was not tenable on a combined reading of paras 1 and 3 of art. 8. Thus, on the taxability aspect, the CIT(A) agreed with the AO. So far as computation of income was concerned, the AO was of the view that provisions of s. 44C of the IT Act, 1961 the Act), were attracted. The assessee's view was that the profit had been computed at a very high percentage of 82 per cent of the gross receipts ignoring the provisions of s. 44BBA and r. 10. The CIT(A) rejected this plea of the assessee and also observed that the AO had not taken into account all the activities which if taken into consideration, the actual profits would be less. Accordingly, he directed the AO to take 70 per cent of the gross receipts as the profits of the assessee. Both the parties were aggrieved by the order of the CIT(A) and approached the Tribunal by way of second appeal. 4. Before the Tribunal, elaborate arguments were made particularly pressing in service art. 8 of the DTAA. Emphasis was laid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would not apply and the DTAA itself has to be interpreted, but in strict terms. With this approach, the Tribunal proceeded to consider the various arguments of the assessee on the merits of the issue. In particular, the meaning of the word "pool" was gone into with great detail. Then the Tribunal analyzed the provisions of art. 8 with particular emphasis on para 3 thereof as the assessee had placed much reliance on the expression "any other activity directly connected with such transportation" used therein: The Tribunal also considered the various judgments referred to on behalf of the assessee. Finally, the Tribunal decided the issue relating to the taxability of the amount received on account of rendering ground handling/engineering services to other airlines against the assessee With regard to the computation of the taxable income, the Tribunal set aside the issue to the AO to determine the same after giving due opportunity of being heard to the assessee. 6. The learned counsel for the assessee pointed out from the various observations of the Tribunal made by it in its order dt. July, 2001. The focus of the learned counsel was on the approach the Tribunal had adopted while d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was the judicial propriety attached with the order of the Tribunal. It was pointed out that the matter was heard by the Tribunal on 11th and12th Oct., 2000, and the order was passed almost one year later. In this connection, our attention was drawn to the Judgment of the Supreme Court in the case of Anil Rai vs. State of Bihar (2001) 7 SCC 318. Our particular attention was drawn to the observations of the Court on pp. 330 and 331 of the Report. The observations were to the effect that the delay in pronouncement of judgment is opposed to the principle of law and at the most, the period may be stretched to six weeks. In any case, the pronouncement of judgment in a case should not be permitted to go beyond two months. The Court observed that where a judgment is not pronounced within three months from the date reserving it, the parties are permitted to file an application with a prayer for early judgment. It was further observed that where a judgment is not pronounced within six months, any of the parties to the lis shall be entitled to move an application with a prayer to withdraw the said case and to make it over to any other Bench for fresh argument. It is open to the Court to gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular income. In other words, undoubtedly, a DTAA is an alternate tax regime, yet, the onus remains on the State to first show that the particular receipt is an income and then proceed to determine whether the said receipt is taxable or not under DTAA. Further, though, as mentioned above, DTAA is an alternate tax regime, it cannot be accorded the status of a statute. Therefore, when it comes to the interpretation of a DTAA, strict rules of interpretation as are applicable while interpreting a statute, cannot be made applicable. This is not a new principle which is evolved recently but has existed since such agreements started taking place between different countries, i.e., even from the time of theLeague of Nations. Second reason as to why strict rules of interpretation cannot be made applicable to DTAA is that s. 90 itself speaks of "relief", "avoidance of double taxation', etc. Therefore, the Federal Court inCanada, in the case of John N. Gladden VS. Her Majesty, the Queen (85 DTC 5188), observed that "we cannot expect to find the same nicety or strict definition as in modern documents, such as deeds, or Acts of Parliament; it has never been the habit of those engaged in dipl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to quote an extract from para 42 of her order: "I would start from the premises that the issue pertaining to the interpretation of taxing provisions is fairly settled to the extent that generally, the rules of strict interpretation would apply. The arguments of the learned Authorised Representative that the liberal construction should be applied to the present facts of the case have been rejected by my learned Brother. To this, I would merely like to state that even applying the rules of liberal construction as is advocated by the learned Authorised Representative, the activity of ground handling and engineering cannot be considered to be treaty protected either under arts. 8.1, 8.2 or 8.3 of DTAA. Thus, as this activity cannot be considered to be operation of aircraft in international traffic or "pooling activity" as this would seem to suggest bringing together of finances, personnel for profit apportionment amongst members and it also cannot be considered to be any other activity directly connected with such transportation even if a liberal construction is applied. Thus, even applying this yardstick, the case of the assessee fails." In the preceding paragraph, we have ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there has been a delay, we find that the issue has been dealt with at length and all the arguments of the parties have been considered. The manner of dealing with the arguments and submissions may not be to the liking of the parties. But, that by itself does not make an order erroneous which can be rectified or recalled. As a matter of fact, as suggested by the Supreme Court in the case of Anil Rai, on which heavy reliance has been placed by the learned counsel. the assessee could have moved an application to the Hon'ble President for the withdrawal of the case and to make it over to any other Bench for fresh argument when no order was pronounced within six months. The assessee chose not to do so and now having received the order which is not in its favour, it cannot plead for the recall of the order at such a late stage. 13. Arguments were also advanced by the parties on the determination of the quantum of the income to be taxed. However, in our view, the Tribunal has given proper directions in this regard over which we cannot sit in judgment. Therefore, we refrain from dealing with this aspect. 14. In the result, the application of the assessee is dismissed. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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