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TMI Blog2012 (10) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia in terms of Article 13(3) of the India UAE DTAA. Failing to appreciate that there was not double taxable in the assessee's case as UAE has not tax regime and the impugned short term capital gains would not be taxable in UAE. (iii) On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (A) has erred in holding that while computing the annual value of the house property, the assessee is eligible to claim the deduction of Rs. 22,888/- on account of maintenance charges paid to the cooperative society, failing to appreciate that the Act dopes not provide for any further deduction on account of repair and maintenance, over and above the standard 30% deduction provided u/s. 24 of the Act. (iv) The appellant craves to add, amend, modify or alter any grounds of appeal at the time or before the hearing of the appeal." 3. Apropos issue of interest income earned by the assessee amounting to Rs. 2,64,172/-. The assessee was resident of Dubai and was holding UAE resident's permit/ visa. The assessee had earned interest income of Rs. 2,64,172/- during the year under appeal. Assessee offered the interest to tax @ 12.5% under Article 11(2)(b) of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is a UAE resident. The DTAA with the UAE mandates that interest income be taxed @ 12.5% under Article 11(2)(b) of the said DTAA. Furthermore, Board Circular No. 728 referred hereinabove also supports the case of the assessee. We further find that Ld. Commissioner of Income Tax (A) has noted that in assessee's own case for assessment year 2006-07 and 2007-08, the appeals were allowed in this regard. Ld. Departmental Representative could not controvert these submissions. Under the circumstances, we uphold the order of the Ld. Commissioner of Income Tax (A) on this issue and decide the issue in favour of the assessee. 8. Apropos issue of short term capital gains On this issue Assessing Officer denied the benefit of Indo UAE DTAA to the assessee in respect of short term capital gains of Rs. 84,55,054/- and levied tax @ 10% alongwith the surcharge and education cess in accordance with the provisions of section 111 A of the Act. Assessee claimed that since the assessee was a tax resident of UAE, the income from short term capital gains was not chargeable to tax in accordance with the provisions of Article 13(3) of the Indo-UAE DTAA. While rejecting the claim of the assessee, Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxed in India and that under article 13(3) of the treaty capital gains realized by a UAE resident were taxable only in the UAE and not in India. Based on the provisions of the Income Tax Act, the AAR held, "The tax treaty has an overriding effect over the provisions of the I.T. Act. Thus, the capital gains arising to the UAE resident on sale of the shares of an Indian company cannot be taxed in India." The Mumbai Tribunal in the case of Green Emirates Shipping and Travels (99 TTJ 988), dated 30.11.2005, after considering various rulings of the AAR and the judgement of the Hon'ble Supreme Court in Azadi Bachao Andolan held that 'Liable to Tax' in the Contracting State does not necessarily imply that the person should actually be liable to tax in that Contracting State by virtue of an existing legal provision but would also cover the cases where the other Contracting State has the right to tax such persons, whether or not such a right is exercised. The same Tribunal in the case of Meera Bhatia (2010-TIOL-46-ITAT-Mum) dated 29.10.2009 after relying on the Green Emirates Shipping case held that "It may result in double non-taxation but then we cannot be oblivious to the fact that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Ld. Departmental Representative. Hence, we find that there is no infirmity in the order of the Ld. Commissioner of Income Tax (A). Accordingly, we hold that the benefit of Indo-UAE Treaty is available with the assessee and short term capital gains derived by him from sale of shares/securities in India were not taxable in India terms of Article 13(3) of the Indo-UAE Tax Treaty. 14. Apropos issue of claim of deduction of Rs. 22,888/- On this issue the assessee claimed deduction of Rs. 22,888/- paid to the cooperative society while computing the Annual Letting Value (ALV) of the property u/s. 23 of the Act. Assessing Officer rejected the claim of the assessee on the ground that deemed deduction of 30% of the net annual value u/s. 24 of the Act subsumes the repair and maintenance expenses of all kind and no further deduction was to be allowed while computing ALV of the residential house. 15. Before the Ld. Commissioner of Income Tax (A) assessee submitted that the impugned charges were paid by it towards common maintenance of the building including provision of lift, cleaning of common areas etc. provided by the society to the occupants of the flats. It was further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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