COMMISSIONER OF INCOME TAX-IV vs. U.P.C. LTD.

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TAXAP/1041/2006HC GujaratGJHC24038018200611 December 2014Bench: HONOURABLE MR. JUSTICE KS JHAVERI,HONOURABLE MR. JUSTICE K.J.THAKER3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court of Gujarat, while admitting the appeal, framed a substantial question of law regarding the applicability of Article 12(2) of the DTAA with the UK and the concessional tax rate. However, during the hearing, the learned advocate for the appellant-revenue conceded that the amount involved in the present case was small and there was a low revenue effect. Citing a CBDT Instruction, the revenue argued that the appeal ought not to have been filed. Consequently, the High Court answered the question of law in favour of the assessee and against the revenue. The appeal was dismissed on this ground, without delving into the merits of the DTAA interpretation or the Tribunal's finding on permanent residence.

What were the facts?

The appellant, Commissioner of Income Tax-IV, challenged the judgment and order dated March 10, 2006, passed by the Income-tax Appellate Tribunal (ITAT), Ahmedabad. The appeal pertains to Assessment Year 1990-91. The High Court of Gujarat admitted the appeal and framed a substantial question of law. The dispute involves the taxability of income and the applicable tax rate, with the Assessing Officer having charged 65% tax, while the Tribunal held that tax is leviable at a concessional rate of 15%. The revenue's appeal was admitted on January 29, 2007.

What were the issues?

1. Whether the decision of the Appellate Tribunal was correct in holding that the assessee does not have a permanent residence in India, and consequently, the assessee's case is covered under Article 12(2) of the Double Taxation Avoidance Agreement (DTAA) with the UK, making tax leviable at a concessional rate of 15% instead of the 65% charged by the Assessing Officer? (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The revenue's advocate conceded that the amount involved was small and the revenue effect was low, citing a CBDT Instruction. Based on this, the revenue argued that the appeal ought not to have been filed and should be dismissed. Revenue's Contention: The revenue's advocate argued that as per CBDT Instruction, given the small amount involved and low revenue effect, the appeal should be dismissed.

AI-generated summary — verify with the full judgment below

O/TAXAP/1041/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1041 of 2006

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER ============================================================ ==== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX-IV....Appellant(s) Versus U.P.C. LTD.....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 11/12/2014 ORAL JUDGMENT Page 1 of 3

O/TAXAP/1041/2006 JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, the appellantrevenue has challenged the judgment and order dated 10.03.2006 passed by the Incometax Appellate Tribunal, Ahmedabad, in ITA No. 1498/Ahd/2004 for the Assessment Year 199091. 2. While admitting this appeal on 29.01.2007, this Court has framed the following substantial question of law: “(A) Whether the decision of the Appellate Tribunal was correct that in holding that the assessee is not having permanent residence in India and hence the assessee's case is covered under Article 122 of the DTAA agreement with UK and tax is leviable at the concessional rate of 15 % as against 65 % charged by the Assessing Officer ?” 3. Heard the learned advocates appearing for the parties and considered the submissions. Learned advocate for the appellant states that the amount involved in the present case is small one and there is low revenue effect, and therefore, as per CDBT Instruction, the revenue ought not to have come in appeal, and therefore, this appeal is required to be dismissed. In that view of the matter, the question is answered in favour of the assessee and against the revenue. This appeal is dismissed accordingly. Page 2 of 3

O/TAXAP/1041/2006 JUDGMENT (K.S.JHAVERI, J.) (K.J.THAKER, J) PAWAN Page 3 of 3

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