TMI Blog2022 (10) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... dia vs. AzadiBachaoAndolan [ 2003 (10) TMI 5 - SUPREME COURT ] where a specific provision is made in the DTAA, that provision will prevail over the general provisions contained in the Income Tax Act if, the same is more beneficial to the assessee as provided under section 90(2) of the Income tax Act. Since there article 8 of the Indo Bhutan DTAA is more beneficial to the assessee, therefore the profits derived by the assessee from the operation of ships or aircraft in international traffic are liable to be taxed in the contracting state in which its place of effective management of the enterprise is situated, which undisputedly is Bhutan. From definition the profit derived Profits derived from the operation of ships or aircraft in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order for AY 2017-18, the ld. Assessing Officer held that as the assessee was having its Permanent Establishment (PE) in India and hence its income was taxable in India under the provisions of section 9 of the Income Tax Act. The ld. Counsel has further pointed out that in respect of the above issue for A.Y. 2017-18, the ld. 1st Appellate Authority (in short CIT(A) ) has accepted the contention of the assessee that since the Place Of Effective Management ( In short POEM ) of the assessee has been in Bhutan, therefore as per Article 8 of the India-Bhutan Double Taxation Avoidance Agreement (in short 'DTAA'), the assessee s income from Air Transport was taxable in Bhutan Only. The Ld. CIT(A) accordingly allowed the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The following incomes shall be deemed to accrue or arise in India :- (i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India. Explanation 1.-For the purposes of this clause- (a) in the case of a business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India ; x----------x-----------x------------x-------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry outside India or specified territory outside India, as the case may be, under subsection (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee. (emphasis supplied by us) Now coming to the relevant provisions of Indo-Bhutan DTAA: ARTICLE 8 SHIPPING AND AIR TRANSPORT 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2. If the plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; 5. It is pertinent to note here that as per the law laid down by the Hon ble Supreme Court in the case of Union of India vs. AzadiBachaoAndolan (2003) 263 ITR 607, where a specific provision is made in the DTAA, that provision will prevail over the general provisions contained in the Income Tax Act if, the same is more beneficial to the assessee as provided under section 90(2) of the Income tax Act. 6. Since there article 8 of the Indo Bhutan DTAA is more beneficial to the assessee, therefore the profits derived by the assessee fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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