Law:

Section:

Section 90, read with section 119, of the Income-tax Act, 1961 and article 29 of the Double Taxation Avoidance Agreement between India and Malta - Double taxation relief - Where agreement exists - Assessment year 1996-97 - Assessee, a non-resident company registered in Republic of Malta, filed its return of income for assessment year 1996-97, claiming relief available under DTAA which came into force on 8-2-1995 - Whether in view of article 29(2) of DTAA, benefits of provisions of DTAA could be availed only for fiscal year starting from 1-4-1996 to 31-3-1997, i.e., assessment year 1997-98 - Held, yes - Whether, therefore, Tribunal was justified in denying benefits of DTAA to assessee for assessment year in question - Held, yes FACTS The assessee, a non-resident company, was registered in the Republic of Malta. The assessee filed its return of income for the assessment year 1996-97, claiming relief available under the DTAA, entered into between the Republic of Malta and the Republic of India which came into force on 8-2-1995. As per article 29(2) of the DTAA, its provisions would be applicable in India as regards income for any 'fiscal year' beginning on or after the first day of April of the calendar year next following that in which the agreement came into force. The Assistant Commissioner rejected the claim of the assessee. On appeal, the Commissioner reversed the decision of the Assistant Commissioner. However, the Tribunal held that the assessee could avail the benefit of agreement only from the assessment year 1997-98. On appeal, the assessee submitted that ( i) in the absence of punctuations in clause 29(2), the word 'that' refers to the fiscal year and not to calendar year; (ii) since the agreement came into force in February, 1995, the benefit should be given from the next fiscal year, i.e., the year starting from 1-4-1995 to 31-3-1996 and; (iii) that the assessee's request for clarification from CBDT was referred to the Chief Commissioner, who advised the assessee that benefit under the agreement was available for the fiscal year starting from 1-4-1995. HELD Section 90 is not a charging section. It gives relief to the taxpayers from paying tax in two…

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