TMI Blog1997 (7) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... court to direct the Tribunal to refer the following question of law for the opinion of this court under section 256(2) of the Income-tax Act, 1961: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that income derived from Sri Lanka cannot be taxed in India ?" During the previous year relevant to the assessment year 1984-85, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Lanka there will be no question of any double taxation. The Commissioner of Income-tax (Appeals) held that the assessee will be entitled to appropriate abatement of tax by granting credit for the Sri Lankan tax payable on the income received in Sri Lanka. He, however, did not agree with the claim of the assessee that it had a permanent establishment in Sri Lanka and, hence, the entire income wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shment it is treated as business profits falling within article 7. That article provides that the profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. In that event, the profits have to be taxed in the other State but only so much of them as is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me under the Indian Income-tax Act. Under article 24(1) when income or capital is subject to tax in both Contracting States, relief from double taxation is to be given in accordance with paragraph (2). In the present case, the income arose in Sri Lanka and it is taxable only in Sri Lanka. The fact that it was not taxed in Sri Lanka would not give rise to taxing the same by the Indian Government es ..... X X X X Extracts X X X X X X X X Extracts X X X X
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