TMI Blog2024 (2) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... n question. The Coordinate Bench in assessee s own case for A.Y. 2016-17 [ 2022 (11) TMI 1447 - ITAT DELHI] has adjudicated identical issue in favour of the assessee. Claims of deemed tax credit under DTAA between India and Oman - HELD THAT:- As decided in assessee s own case for A.Y. 2016-17 [ 2022 (11) TMI 1447 - ITAT DELHI] tax exemption on dividend is granted with the objective of promoting economic development within Oman by attracting investments. - Shri Narendra Kumar Billaiya, Accountant Member And Shri Kul Bharat, Judicial Member For the Assessee : KVSR Krishna, CA And Shri Aman Goel, CA For the Department : Shri Waseem Arshad, CIT(DR) And Shri Sandeep Kr. Mishra, Sr. DR ORDER PER KUL BHARAT, JM: The captioned cross appeals, preferred by the assessee as well as the Revenue, for A.Y. 2017-18 2018-19, involve common issues for adjudication. Therefore, they were taken up together and are being disposed of by this composite order for the sake of convenience. 2. Facts for both the assessment year in question, in brief, are that the case was selected for scrutiny and the assessments u/s 143(3) of the Income-tax Act, 1961 (hereinafter ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Noida land. On this aspect it is the submission of the Ld. AR that in assessee's own case for the assessment year 2008-09 in ITA numbers. 2304 and 2321/Del./2012, a Coordinate Bench of this Tribunal considered the same and after careful consideration thereof it was observed that the nature of lease, the location of the land, the terms and conditions of lease etc, for example, it is located in the Porto premises, the entry and exit of which is with Port Security, land used only for storage during transit etc., that the assessee has in its long time lease with Visakhapatnam Port trust is different from the terms and conditions of lease from Noida Authority; that the principle on the issue whether the rent in question is to be allowed as Revenue expenditure or not, is laid down by the Hon'ble High Court in assessee's own case for earlier assessment years and this depends on the facts of each case; that the issue was to be examined in the interest of Justice; that no prejudice would be caused to the Revenue in examining the matter once again; and therefore, the issue was set aside to the file of the learned Assessing Officer for considering the arguments of the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, The Ld. CIT(A) has erred in law and on the facts deleting the disallowance of Rs. 12,13,41,449/- despite the fact that in course of investment to earn exempt income, the assessee has incurred expenditure for earning such exempt income. The assessee did not maintain separate accounts for its exempt activities and has incurred expenses of interest which cannot be attributed to earning of any particular income and also the fact that administrative and managerial expenses in relation to exempt income not allowable. 3. Whether on the facts and circumstances of the case and in the provisions of the law is it correct to hold that the dividend income earned by the assessee is taxable but exempted under Omani Law to entitle assessee to the benefits of the Double Taxation Avoidance Agreement between India and Oman? 4. Whether on the facts and circumstances of the case and in the provisions of the law is it correct to allow the deemed tax credit of Rs. 7,31,74,848/-on dividend income despite the fact that no tax has been paid by the assessee on earned dividend income in Oman. 5. Whether on the facts and circumstances of the case, The Ld. CIT(A) has erred in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come despite the fact that no tax has been paid by the assessee on earned dividend income in Oman. 5. Whether on the facts and circumstances of the case, The Ld. CIT(A) has erred in law and on the facts of the case allowing the appeal of the assessee against the disallowance of Deemed Tax Credit of Rs. 11,42,27,621/- by the AO despite the facts that in the case of the assessee, the Revenue filed SLP in Hon'ble Supreme Court of India against the order of the Hon'ble Delhi High Court in ITA 578/2016, CM APLL. 28947/2016 and 579/2016, CM APPL. 28948/2016 for the AYs 2010-11 and 2011-12 6. That the order of the Ld. CIT(A) is perverse, erroneous and is not tenable on facts and in law. 7. That the grounds of appeal are without prejudice to each other. 8. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either on or before the final hearing of the appeal. 9. A perusal of the grounds of appeal would reveal that in both the assessment years the Revenue has taken identical grounds, excepting difference in quantum. Admittedly, facts are also identical. 10. Ground nos. 1 2 in both the assessment years relate to deletion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uth India Trust Association CSI Cinod Secretariat, Madras (1992) 3 SCC 1, the present appeal is dismissed being covered by the judgment passed by the learned predecessor Division Bench in PCIT vs. IL FS Energy Development Company Ltd (supra) and Cheminvest Limited vs. Commissioner of Income Tax- VI, (2015) 378 ITR 33. 10. Accordingly, the appeal and application are dismissed. However, it is clarified that the order passed in the present appeal shall abide by the final decision of the Supreme Court in the SLP filed in the case of PCIT vs. IL FS Energy Development Company Ltd (supra) 12. Respectfully following the findings of the Hon'ble High Court of Delhi, Ground Nos. 1 and 2 are dismissed. 13.1 Facts of the case for A.Y. 2017-18 and 2018-19 remaining the same, respectfully following earlier decision of the Coordinate Bench in assessee s own case and the order of the learned CIT(A) being in consonance with the decision of the Tribunal , we see no reason to take a different view in the matter. Ground nos. 1 2 of Revenue s appeals for A.Y. 2017-18 2018-19 are dismissed accordingly. 14. In ground nos. 3 to 5 for both A.Y. 2017-18 2018-19 the Revenue ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for economic development of Oman: (4) The tax payable in a Contracting State mentioned in paragraph 2 and paragraph 3 of this Article shall be deemed to include the tax which would have been payable but for the tax incentive granted under the laws of the Contracting State and which are designed to promote development. The relevant portions of Article 11, which deals with dividend income in the DTAA, reads as follows: 1. Dividends paid by a company which is resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State. 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of the State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed:... Naturally, the revenue's argument is that Article 11 (1) applies, to say so, it urges that the dividend income is not taxed, at least as far as cooperative societies are concerned and that in any event, the certificate relied upon by the assessee to claim the benefit of Article 25 (2) was not issued by a compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the above Project would be setting up Permanent Establishment in Oman and that their equity investments in the Project would be effectively connected with such Permanent establishments. On the above presumption, we confirm that tax would be payable on dividend income earned by the Permanent Establishments of the Indian Investors, as it would form part of their gross income under Article 8, if not for the tax exemption provided under Article 8 (bis). As the introduction of Article 8 (bis) is to promote economic development in Oman, the Indian Investors should be able to obtain relief in India ITA NOS. 6785 6786/DEL/2015 (AYRS. 2010- 11 2011-12) KRISHAK BHARATI CO-OPERATIVE LIMITED VS. ACIT under Article 25 (4) of the Agreement for Avoidance of Double Taxation in India. All other matters covered in our letter No. FT/13/92/, dated 6th August, 2000 remained un-changed. 26. The Tribunal concluded that the above clarification showed that the amendment of the law was to promote Omani economic development and to encourage investment in Omani companies. The Sultanate of Oman itself therefore clarified the issue regarding interpretation of Article 8 (bis). The tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g economic development within Oman by attracting investments. That order first included dividend income (in the total income determined) and thereafter granted deduction. For later years as well, assessments were made similarly. The ITAT also noticed as follows: Up to the tax year 2011 dividend has been first included in the total income and thereafter deduction has been granted. The facts mentioned above clearly establish that the Assessee Society is entitled to getting credit for the deemed dividend tax by virtue of the provisions of DTAA read with Section 90 of the Income Tax Act, 1961 together with the clarifications issued by the Sultanate of Oman and the assessment made under the Omani Laws. In view of the above it is respectfully submitted that on merits also Assessee Society is entitled for the tax credit which has been rightly allowed by the Assessing Officer and, therefore, the Ld. PCIT has completely erred in giving directions to the Assessing Officer under Section 263 to withdraw the said tax credit. These findings are, in this court's opinion, in consonance with logic and reason and do not call for interference. Both questions of law are answered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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