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TMI Blog2019 (8) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2014. The first award i.e. the award dated 30.01.2014 relates to the merits of the matter while the second award is limited to costs. 2. The record shows that the judgment debtor had filed objections under Section 48 of the Arbitration and Conciliation Act, 1996 (in short "1996 Act"). This court dismissed the objections vide judgment dated 07.11.2016. 3. The judgment debtor had carried the matter in appeal right up to the Supreme Court. The Supreme Court, vide order dated 27.02.2017 passed in Special Leave Petition (Civil) No.6369/2017 (SLP), dismissed the SLP. Consequently, the judgment of this court dated 07.11.2016 stands sustained. 4. The record also shows that pursuant to the orders passed by this court, the judgment debtor deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s resident. This is subject to certain exceptions in Article 22(3) like income from lottery, crossword puzzles, card games etc., which are taxable in the contracting state in which they have arisen. That is, under Article 22(3) of the DTAA, income which is in the nature of windfall gains are taxed in the contracting state in which such income has arisen. A windfall gain is income received due to an unforeseen event over which the recipient had no control. The income from the award, prima facie, is also in nature of a windfall gain. However, whether it falls under the exceptions of Article 22(3) is to be determined by the Assessing officer pursuant to a detailed assessment under the Act. At this stage therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the First Schedule of the Finance Act, 2017 prescribing the rate of deduction of tax at source in certain cases. However as per DTAA, interest income is taxable @ 10%. Considering the facts of the case and subject to a detailed assessment in terms of the Act, after prima facie providing the benefit of DTAA to the decree holder, tax may be deducted on this amount @ 10%. Total INR 4,42,76,935.07 + interest As per above. 6. As would be evident, the income tax department appears to have taken a position with regard to four limbs of the aforementioned awards. The first limb pertains to the award of monies to the decree holder in respect of breach of contract. The second limb relates to costs of arbitration. The third limb pertains to lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... biguous. What falls within its ambit is only income received from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any nature. It is only such income which can be taxed, if at all, in India. 11. Therefore, I am not inclined to accept the stand of the income tax department with respect to this aspect of the matter, as indicated hereinabove by me. 12. Insofar as the monies received towards arbitration costs and legal costs are concerned, the aforementioned tabular chart would show that the income tax department proceeded on completely erroneous view of the matter. 13. The income tax department has treated monies received under the award towards arbitration costs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a similar submission and in that behalf, relied upon the following judgments: (i) All India Reporter v. Ramachandra D. Datar, (1961) 2 SCR 773. (ii) V.K. Dewan v. DDA, Execution Petition No. 194/2005, Delhi High Court. (iii) Sino Ocean Limited v. Salvi Chemical Industries Limited, Chamber Summons No. 76/2013 in Execution Application (Lodg.) No. 263/2012. (iv) American Home Products Corporation v. MAC Laboratories Pvt. Ltd. and Anr., (1986) 1 SCC 465. (v) Islamic Investment Company v. Union of India (UOI) and Anr., 2002 (4) BOMCR 685. (vi) S.S. Miranda Ltd. v. Shyam Bahadur Singh, (1985) 154 ITR 849. 18. As correctly argued by Mr. Banerji, this aspect of the matter need not detain me in view of what is stated hereinabove by m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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