TMI Blog1962 (8) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... e or likely to be made in Pakistan, and no application was made for taking any steps under the provisions of the Agreement for the Avoidance of Double Taxation between India and Pakistan (hereinafter referred to as A.A.D.T. ). In fact, not only was the assessment made, but the full amount of tax was paid on 10th December, 1948, in respect of 1945-46 and on the 10th January, 1949, in respect of 1946-47. It is now stated that on the 27th February, 1950, notice was issued by the Income-tax Officer, Karachi, whereby assessment proceedings against the assessee were initiated in Pakistan for the relevant assessment years 1945-46 and 1946-47. It is further stated by the assessee that a letter was written on the 21st March, 1950, to the Income-tax Officer, Central Circle V, Calcutta, on behalf of the assessee, intimating to him about the said notice and enquiring as to whether any tax for these years would be payable in Pakistan and whether a refund would be granted in India to the extent of the tax payable by the company in Pakistan. This letter was never received by the said officer. On the 28th March, 1950, another letter was written on behalf of the assessee to the said officer, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proceedings by the Pakistan authorities appear to have been completed on or about the 15th December, 1953. On the 30th December, 1953, a claim was made on behalf of the assessee in respect of assessments for the years 1945-46 and 1946-47, a copy of which appears in the paper-book at pages 40-41. It will appear from the claim, that what was asked for is that certain abatements should be granted. There was no mention of any refund. The only particulars given were of a consolidated sum denoting the income arising in Pakistan for the relevant assessment years followed by the amount of income-tax and super-tax thereon calculated at the rate of 81 ps., from which the D.T.T. relief already granted has been deducted, showing the abatement due , which was claimed. On the 2nd February, 1954, the Income-tax Officer intimated to the assessee as follows: Your claim for abatement and refund under section 49AA submitted in your letter No. A/cs. L. 127 D/O (7386) dated 30th December, 1953, has been rejected as the claim made was much out of time. There were two orders made for the two years of assessment, namely, 1945-46 and 1946-47. Against these orders appeals were preferred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t B State or any part of His Majesty's Dominions (including the United Kingdom), where the laws of that State or part provide for relief in respect of tax charged on income both in that State or part and in the taxable territories which appears to the Central Board of Revenue to correspond to the relief which may be granted by this section. (3) For the purposes of this section 'Burma income-tax' means any income-tax or super-tax charged under any law in force in Burma where the laws of Burma provide for relief in respect of tax charged on income both in Burma and in the taxable territories which appears to the Central Board of Revenue to correspond to the relief which may be granted by this section. 49AA. Agreement for avoidance of double taxation in India and Pakistan or the United Kingdom.--The Central Government may enter into an agreement with Pakistan or the United Kingdom for the avoidance of double taxation of income, profits and gains under this Act and under the corresponding law in force in Pakistan or the United Kingdom, and may, by notification in the Official Gazette, make such provision as may be necessary for implementing the agreement. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 10, 1947. By that notification all the provisions of the said agreement which are annexed to the said Notification shall be given effect to in the Dominion of India . Thereby the provisions of the Agreement have become operative in law. The Agreement is divided into nine articles and contains a Schedule. The relevant articles are as follows: Article IV.--Each Dominion shall make assessment in the ordinary way under its own laws; and, where either Dominion under the operation of its laws charges any income from the source or categories of transactions specified in column 1 of the Schedule to this Agreement (hereinafter referred to as the Schedule) in excess of the amount calculated according to the percentage specified in columns 2 and 3 thereof, that Dominion shall allow an abatement equal to the lower amount of the tax payable on such excess in their (sic) Dominion as provided for in Article VI. Article V.--Where any income accruing or arising without the territories of the Dominions is chargeable to tax in both the Dominions, each Dominion shall allow an abatement equal to one-half of the lower amount of tax payable in either Dominion on such doubly taxed income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of making such an assessment, the tax payable in Pakistan is known, which can only be known if the assessment has already been made in Pakistan, then there is no difficulty in allowing or calculating the abatement at once. On the other hand, if at the time of making an assessment under the Indian Income-tax Act no assessment has been made in Pakistan, with the result that the tax payable on the double income in Pakistan is not known, an assessment would be made under the said Act on the basis of the world income, including the income which had accrued in Pakistan, without allowing any abatement, but recovery of the tax equal to the estimated abatement would be held in abeyance for a period of one year. If the assessee produces the certificate of assessment in Pakistan within the period of one year, then the Income-tax Officer is granted the jurisdiction to adjust the uncollected portion of the demand against the abatement allowable under the Agreement. If the assessee cannot produce the certificate within one year, he may apply to the Income-tax Officer for an extension of the period and the Income-tax Officer may at his discretion extend the period. If no such certificate is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounted to nothing. No particulars were given, and in the absence of particulars, it could not be said that any claim has been made. It appears that in the case of relief against double taxation in the U.K. there is a practice of filing a provisional claim for a refund. There is no such practice in respect of the A.A.D.T. In fact, there cannot be such practice because under A.A.D.T. there cannot arise any claim for refund, as is the case in the case of rules made under section 49A of the Income-tax Act. As I have mentioned above, under the A.A.D.T. all that can be done is to claim an abatement at the time of the assessment and if the tax payable in Pakistan is not known, then the assessee can ask for an estimated abatement and keep the payment thereof in abeyance. In the present case, the time for doing so had long ago expired and assessment orders had been made for the relevant years in October, 1948, and the full amount of tax was paid. After this, there was no scope for asking for an abatement under the A.A.D.T. Perhaps, the assessee could still have agitated the matter of abatement if it had preferred an appeal against the assessment order and the appeal was pending. In such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le taxation and is quite inapplicable for the purpose of refund. When an assessment order has been made and completed and cannot be challenged in appeal and has also been fully paid up, there is no further scope for proceeding under the A.A.D.T. Under section 48, an application for refund can only be successful if the assessee satisfies the income-tax authorities that the amount of tax paid by him and on his behalf in any year exceeds the amount with which he is properly chargeable under the Act. In such a case he is entitled to a refund of any such excess. Where, however, the assessment order remains as it is, and where nothing can be done about it under Article VI of the A.A.D.T. then the income-tax authorities cannot hold that the amount that has been charged under the assessment order was not properly chargeable . Consequently, an application for refund cannot succeed. The income-tax authorities have observed that this is a hard case, but have also rightly held that hard cases cannot be allowed to make bad laws. We are in agreement upon this point. Doubtlessly the assessee was confused as regards its rights to relief against double taxation. In fact, even as late as 23rd ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
