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TMI Blog2014 (5) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... sident individual assessee, is not liable to offer the overseas rental income of Rs. 7,32,731/- to tax in India, thereby disallowing (Rs. 5,52,490) computed under the head Income from House Property in accordance with the relevant provisions of the Income Tax Act, 1961 (or "Act). 2. That on the facts and circumstances and in law, the Hon'ble CIT(A) erred in placing reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. P.V.A.L. Kulandagan Chettiar to hold that the income/(loss) arising to the appellant from property situated in Australia is taxable/(allowable) only in Australia without appreciating the provisions of sections 4 and 5 of the Act as applicable to a reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue vide para 4.6 which is as under: "4.6 From the submissions of the appellant it is apparent that the immovable property purchased by the appellant was already on rent and the appellant continued to receive the rent thereafter. It is an undisputed fact that this property was never occupied by the appellant for his personal use but was given on rent from the date it was purchased. The appellant had received the rent from this property since the purchase of the property. In these circumstances it is apparent that the interest payment to ANZ Bank, Australia is on account of money borrowed by the appellant for the purpose of purchasing property from which the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically asked whether any TDS was deducted on the rent received by him from property in Australia and whether any return had been filed by him pertaining to this income in Australia. The AR of the appellant submitted that he was not sure if any TDS was deducted on the rent received by him from property situated in Australia and if any return was filed by him in Australia. The AR of the appellant submitted that in case any TDS had been deducted on the rent, the same was not taken into account while computing the house property income in India implying thereby that only the net rent received and not the gross rent received had been shown in the return of income in India. The appellant also explained that the expenses paid the agent who was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case are similar to the facts of the case referred to above. Therefore, the income (or loss) arising to the appellant from property situated in Australia is taxable (allowable) only in Australia. Therefore, the loss arising to the appellant and claimed by the appellant in the computation of income on account of immovable property situated in Australia is allowable only in Australia and is therefore not allowable in India. Keeping in view the aforesaid factual and legal position the appellant's claim of loss of Rs. 5,52,490/- is not allowable. The loss of Rs. 5,52,490/- claimed by the appellant of house property is accordingly disallowed. " 6. Before us. the Ld. Counsel for the assessee submitted that as per Sec 90(2) the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a result of the amendment w.e.f. 1 April 2004, by which sub-sec (3) to sec 90m has been brought in the statute from the Assessment year 2004-05, there would be a clear departure from the earlier position, wherein various Courts have interpreted the expression 'may be taxed". He pointed out that as per this clause even expression "may be taxed" has been used even then such income was taxable in India, therefore income of the assessee is in any case taxable in India. In this regard he referred to the decision of Mumbai Bench of the Tribunal in case of Essar Oil Ltd. v. Addl CIT, ITA No. 2428/Mum/2007 (copy of the order has been filed in the paper book as page 94 to 200). According to this decision after the notification, there was a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued bite Central Govt in the official gazette in this behalf." Plain reading of Sec 90(2) shows that wherever DTAA is applicable in case of an assessee then the assessee has an option to apply either Indian Tax Laws or provisions of DTAA if same are more beneficial to the assessee. Therefore it is clear that it is an option of the assessee whether to return income under the Indian tax laws where DTAA is applicable. In case before us, if the assessee has exercised the option of filing return under Indian law, the same could not have been refused simply because DTAA was applicable because it was option of the assessee. In any case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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