TMI Blog2010 (10) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1876/Mum/2006 - - - Dated:- 29-10-2009 - ORDER Per : Pramod Kumar : 1. By way of this appeal, the assessee appellant has called into question correctness of order dated 7th February 2006, passed by the learned CIT (A) for the assessment year 2000-091, holding that the assessee is liable to pay tax on short term capital gains on sale of shares. 2. The controversy requiring our adjudication is set out in a very narrow compass of narrow and undisputed facts. The assessee before us is a resident of United Arab Emirates and her fiscal domicile is in the UAE. On this basis, she has claimed benefit of the Double Taxation Avoidance Agreement entered into by Government of India with the Government of United Arab Emirates hereinafter referred to as 'Indo UAE tax treaty'). In terms of Article 13(3) of this Indo UAE tax treaty, as it stood at the relevant point of time, capital gains on alienation of shares are 'taxable only in the Contracting State of which alienator is resident' , This claim, however, did not find favour with the authorities below. Relying upon the decision of Hon'ble Authority for Advance Ruling in the case of Cyril Eugene Pereira&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry is not sine qua non for availing relief under the treaty from taxability in the other courts. All that is necessary for this purpose is that the person should be liable to tax in the contracting State by reason of domicile, residence, place of management, place of incorporation for any other criterion of similar nature which essentially refers to the fiscal domicile of such a person. In other words, if fiscal domicile of a person is that person is actually liable to pay tax in that country, he is to be treated as resident of that contracting State. The expression 'liable to tax is not to read in isolation but in conjunction with the words immediately following it i.e. 'by reason of domicile, residence, place of management place of incorporation or any other criterion of similar nature'. That would mean that merely a person living in a Contracting State should not be sufficient, that person should also have fiscal domicile in that country. These texts of fiscal domicile which are given by way of examples following the expression 'liable to tax by reason of i.e. domicile, residence, place of management, place of incorporation etc. are no more than examples of loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 219) published by the International Bureau of Fiscal Documentation, Amsterdam. Prof Dr. Klaus Vogel, after referring to the Tribunal decision in the case of Green Emirate Shipping and Travel (supra), had observed as follows:- An unusual case decided by the Dutch Gerechtsh of Amstredam Court of Appeals on 15 February 2006 confirms this decision. The owners of the Dutch company, X BV emigrated from the Netherlands to Greece in 1995 and advised the Dutch tax authorities that they now exercised management and contract fro their new location, as a consequence of which the company became a Greek resident. This was not in dispute in May 2000, the taxpayers informed the Dutch authorities that, sine their relocation, they had endeavoured to register the company with the Greek Tax authorities, but failed to succeed because of the Greek tax authorities, but failed to succeed because of the Greek bureaucracy the company had not yet been assessed to the Greek corporate income tax. These facts were not contested by the Dutch authorities. But in 2004 they assessed the taxpayers for the Dutch corporate income tax retrospective for the year 1995. The tax inspector argued that, for Applying Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e desirable for the Government to take a clear cut stand on the issue or let the matter be resolved at the level of Governments of the Contracting States. That perhaps is a better solution for quickly resolving the disputes on such a fundamental aspect of a tax treaty as to who will be eligible for the benefits of that tax treaty. We hope Government will resolve this matter once for all and would not allow that uncertainty to last for long.. 9. We have noted that a successful initiative has indeed been made to resolve this issue at level of the Contracting States. On 6th March 2007, a protocol, amending the Indo UAE tax treaty, has been entered into. This protocol has since been notified by the Government of India vide Notification No. 282 of 2007, dated 28th November 2007 (213 CTR Statues 64). One of the amendments made by this protocol is the change in definition of resident in Article 4(1)(b) which now provides that for the purpose of the Indo UAE tax treaty, resident of a Contracting State, in the case of the UAE, means an individual who is present in the UAE for a period or periods aggregating totalling in aggregate at least 183 days in the calendar year concerned, and a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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