The Income Is Not Chargeable To Tax In India In View Of Section 90(2) Of The Act Which Read As Under v. Azadi Bachao Andolan (2003) 132 Taxman 373 (Sc) , Wherein In Paragraph 26, It Has Been Observed As Under

IN THE HIGH COURT OF PUNJAB AND HARYANA|AT CHANDIGARH ITA No.428 of 2017 (O&M)Date of Decision :09.07.2019 The PR. Commissioner of Income Tax, Gurgaon 2"+%.% ..--- Appellant EGL Eagle Global Logistics (India) Pvt. Ltd. ee ReSpondents CORAM: HON'BLE MR.JUSTICE KRISHNA MURARI, CHIEF JUSTICEHON'BLE MR.JUSTICE ARUN PALLI, JUDGE Present ;Mr. Tajender K. Joshi, Advocate for the appellant. Mr. Kamal Swahney, Advocate withMr. Prashant Meharchandani, Advocate andMr. Abhivadya Sood, Advocate for respondent. KRISHNA MURARI, CHIEF JUSTICE(Oral) Heard learned counsel for the parties. Following substantial question of law arises for adjudication in this appeal:- “Whether, on the facts and in the circumstancesof the case, the Hon'ble ITAT was right 1n law in deletingthe disallowance of Rs.3,63,95,888/- made by the AssessingOfficer as the Tax Deducted at Source should have beendeducted since the amount paid by the assessee to its parentcompany attracted provisions of Section 40(a)(ia) read withSection 9(1)(vul)”. Learned counsel appearing for respondent-assessee contendsthat in view of the existence of a double taxation avoidance agreementwhich is available to the recipient entity based in United States of America, ITA No.428 of 2017 (O&M) the income is not chargeable to tax in India in view of Section 90(2) of theAct which read as under:- 0Where the Central Government has enteredinto an agreement with the Government of any countryoutside India under or specified territory outside India, asthe case may be, under sub-section (1) for granting relief oftax, or as the case may be, avoidance of double taxation,then, in relation to the assessee to whom such agreementapplies, the provisions of this Act shall apply to the extentthey are more beneficial to that assessee”’. In view of Section 90(2) of the Act and clause 4(b) of Article12 of the Treaty, the provisions of this Act would stand applicable onlywhere fees for included services taxable only if there is a make availabletechnical knowledge. In the case in hand finding of fact that has beenreturned by the ITAT, there is no make available of the technicalknowledge, therefore, the provisions of the Income Tax Act would not standattracted in the transactions in question. The issue stands squarely coveredby the decision of the Hon'ble Apex Court in the case ofUnion of India Vs.Azadi Bachao Andolan (2003) 132 Taxman 373 (SC), wherein inparagraph 26, it has been observed as under:- ‘°A survey of the aforesaid cases makes it cleathat the judicial consensus in India has been thatsection 90IS specifically intended to enable and empower the CentralGovernment to issue a notification for implementation ofthe terms of a double taxation avoidance agreement. Whenthat happens, the provisions of such an agreement, withrespect to cases to which where they apply, would operateeven if inconsistent with the provisions of theincomeA! , ActWe approve of the reasoning in the decisions which wehave noticed. If it was not the intention of the legislature tomake a departure from the _ general principle ofchargeability to tax undersection 4and the generalprinciple of ascertainment of total income undersection 5ofthe Act, then there was no purpose in making those sections"subject to the provisions" of the Act. The very object oferaiting the said two sections with the said clause is toenable the Central Government to issue a notification undersection 90towards implementation of the terms of the DT Awhich would automatically override the provisions of theIncome- tax Act in the matter of ascertainment ofchargeability to income tax and ascertainment of totalincome, to the extent of inconsistency with the terms of theDTAC”. It is also undisputed that a notification under Section 90towards implementation of the terms of the DTAs has been issued by theCentral Government, in the case in hand. In view of the above, the question as raised for adjudication isanswered in negative and the appeal accordingly fails and stands dismissed, It is also undisputed that a notification under Section 90towards implementation of the terms of the DTAs has been issued by theCentral Government, in the case in hand. In view of the above, the question as raised for adjudication isanswered in negative and the appeal accordingly fails and stands dismissed, (KRISHNA MURARITCHIEF JUSTICE (ARUN PALLI)JUDGE 09.07.2019Manoj Bhutani Yes/NoYes/No Whether speaking/reasonedWhether reportable