TMI Blog2022 (10) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... invested. That cannot anyway have any bearing on the taxation of income. In our considered view, therefore, since, under the terms of the Indo UAE tax treaty, the right to tax the amounts in question, even if that be of income nature in the hands of the present assessee, does not belong to India, all these issues being raised by the learned counsel are wholly academic as of now. In the present case the assessee has also filed the Tax Domicile Certificate for the relevant Financial Year issued by the concerned authority in Ministry of Finance, UAE, in support of its claim. The learned D.R. could not show us in any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following aforesaid judicial precedent in assessee s own case, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, grounds raised by the Revenue are dismissed. - I.T.A. No.792/Mum/2022 - - - Dated:- 11-10-2022 - Shri Pramod Kumar, Vice President And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri. N. S. Virani For the Department : Shri. Lovish Kumar ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income, which falls in the domain of IT Act, 1961. The treaty does not cover the taxation of income of the nature such as unexplained investment. 4. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) failed to appreciate that cash provided as loan must have been generated in India as there is no evidence furnished by assessee to show that it is earned outside India, and under the domestic tax law's, there is a presumption of deemed income. 4. The only grievance of the Revenue, in the present appeal, is against the deletion of addition on account of investment made in India by the assessee, who is non-resident Indian settled in the United Arab Emirates (UAE) 5. The brief facts of the case, as emanating from the record, are: The assessee is an Indian National, fiscally domiciled in and tax resident of UAE for over three decades and therefore he is eligible for benefit of India UAE Double Taxation Avoidance Agreement. As per information received from the DDIT (Investigation), Mumbai it was noticed that the assessee has paid cash amounting to Rs. 3,65,00,000/- as loan during the year under consideration to M/s Ahuja Group. Since, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant on merits also for AY 2009-10 and 2010-11. 9.4 The Hon'ble Tribunal has given categorical findings that India does not have right to tax the sum in view of Article 22 of the India UAE Treaty. The sum of Rs 3.65 crores would be taxable, if at all it is so, in UAE and not in India. Also, the sum will not be taxable in India even without reference to DTAA. The observations of my predecessor in this connection are already reproduced. Following the same, I hold that the sum is not taxable even on merits. In view of both these reasons, it is held that the amount is not taxable in India u/s 69 and the addition is deleted. Being aggrieved, the Revenue is in appeal before us. 7. Having considered the submissions of the both sides and perused the material available on record, we find that similar issue arose for consideration before Co-ordinate Bench of the Tribunal in assessee s own case in ITO v/s Rajeev Suresh Ghai, in ITA No. 6290/Mum/2019, for assessment year 2010-11. The Co-ordinate Bench of the Tribunal, while deciding the issue in favour of the assessee, vide order dated 23-11-2021, observed as under: 4. We have heard the rival contentions at length, perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base . Obviously, this has no application in the present situation either, but what it does highlight anyway is the economic activity nexus with the income, which can be taxed under Article 22(1). Of course, where revenue authorities can bring on record any material to demonstrate, or indicate, that the unexplained investments in question have been made out of incomes generated in India, the situation will be materially different, but that is not the case at present. 6. As for the plea that the India- UAE treaty provides for taxability of income arising from immovable property, this plea is contextually irrelevant inasmuch as what we are dealing with right now is not an income from the immovable property, but an income said to have been invested in an immovable property. The plea is thus devoid of any legally sustainable merits. As for article 23(1), which refers to taxation of capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be any taxation of this income in the hands of the assessee under the Indo UAE tax treaty. 11. It is always useful to bear in mind the fact that, on the first principles, the trigger for taxation of an income in a source jurisdiction is either the economic activity or the linkage of an income with that jurisdiction, and that in the absence of such a linkage or economic activity nexus, there cannot be any source taxation, The assessee before us is certainly an Indian national, but he is admittedly resident in the UAE so far as his residential status, under the Indo UAE tax treaty is concerned, is of the UAE tax resident. The residuary taxation rights, in terms of the treaty provisions, belong to the residence jurisdiction, but even if that was not to be so, the residence rights can at best go to the source jurisdiction, which in turn refers to a jurisdiction in which the income is earned, rather than a jurisdiction in which the income is invested. By no Stretch logic, therefore, such an income could be taxed in India, which is neither residence nor Source jurisdiction; it is at best investment jurisdiction. However, the scheme of tax treaties limits the rights of taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel is content with the relief given to the assessee on the basis of the treaty provisions, if that is the conclusion we reach, but he nevertheless wishes to reserve his rights to raise all these issues as and when, in his considered view, it is necessary to do so. 15. Given our findings as above, however, it is not really necessary to deal with these aspects on merits. The assessee before us is a tax resident of the United Arab Emirates and is thus entitled to the benefits of the Indo UAE tax treaty. When the rights to tax the income in question. under the applicable tax treaty provisions, are allocated to the residence jurisdiction, it is wholly immaterial whether or not the source jurisdiction has the right to tax that income, and, in any event, India is not even a source jurisdiction for the income in question as no economic activities have been carried out in India- it is at best the jurisdiction in which earnings are invested. That cannot anyway have any bearing on the taxation of income. In our considered view, therefore, since, under the terms of the Indo UAE tax treaty, the right to tax the amounts in question, even if that be of income nature in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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