ASSISTANT COMMISSIONER OF INCOME TAX Vs. KARAN THAPAR
LAWS(IT)-2014-5-103
INCOME TAX APPELLATE TRIBUNAL
Decided on May 09,2014

ASSISTANT COMMISSIONER OF INCOME TAX Appellant
VERSUS
KARAN THAPAR Respondents

JUDGEMENT

- (1.) THE above captioned appeals have been preferred by the Revenue against the order of the CIT(A) -XXX. New Delhi, dt. 30th April, 2012 in appeal Nos. 3331, 3330, 3329 and 3328 for asst. yrs. 2000 -01, 2002 -03 and 2009 -10. Fifth appeal of the Revenue on ITA No. 1286/Del/2011 and C.O. NO. 338/Del/2011 have been filed against the order of CIT(A) -XXX, New Delhi, dt. 20th Dec., 2010 in appeal No. 224/2008 -09. Since all five appeals of the Revenue have been preferred on similar issue that family pension received by the assessee from UK from the employer of deceased wife of the assessee is duly covered under art. 23(1) of the DTAA between India and UK and applicability of art. 23(3) arises only when items of income are not dealt with in the foregoing articles of the convention, therefore, for the sake of convenience and clarity in the findings, we are disposing of these appeals by this consolidated order.
(2.) THE grounds raised by the Revenue in appeals related to asst. yrs. 2000 -01, 2002 -03, 2003 -04 and 2009 -10 are similar which read as under: On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in: 2.DELETING the additions made to the total income on account of family pension received by the appellant in UK stating that it is covered under art. 23(3) of the DTAA between India and UK and since the UK has taxed the amount, the same cannot be taxed in India ignoring the fact that the above payment is covered under art. 23(1) of the DTAA. Ignoring the fact that the assessee's case is duly covered under art. 23(1) of the DTAA between India and UK.
(3.) IGNORING the fact that the art. 23(1) is specific and not residuary like art, 23(3). Deleting the addition as the applicability of art. 23(3) arises only when the items of income are not dealt with in the foregoing articles of the convention, which is not the case here as the pension received by the assessee is beneficially owned by him as a resident of the Contracting State. 3. The grounds raised by the Revenue in the appeal related to asst. yr. 2006 -07 read as under: On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in: (I) Deleting the addition of Rs. 21,89,622 made on account of pension received from Royal Bank of Scotland/Nat West Ltd., UK; (II) Accepting the assessees contention that the pension of Rs. 21,69,622 was not covered by art. 20(1) of the DTAA between India and UK. without appreciating the fact that the amount received by the assessee cannot be treated as different from pension covered by art. 20(1) of the DTAA as (a) the DTAA between India and UK nowhere mentions the word family pension and (b) the para 2 of art. 20 of the DTAA between India and UK defining the pension does not refer to the recipient of pension and if the income is characterized as pension the taxability is to be decided under the article dealing with the pension, irrespective of the recipient; (III) Without prejudice to ground No. (11) above, and even assuming that the amount received by the assessee from Royal Bank of Scotland/Nat. West Ltd. UK. Is not covered by art, 20(1) of the DTAA between India and the UK, the CIT(A) has erred in law and on the facts of the case that the amount is covered by art. 23(3) of the said agreement, while overlooking the provisions of art, 23(1) of the said agreement. 4. Briefly stated, the facts giving rise to these appeals are that the assessees wife was working in UK with Royal Bank of Scotland/County Nat West Ltd. (hereinafter referred to as RBS) and she died on 22nd April, 1989 while she was in service. On her death, the employer of the wife of the assessee decided to family pension to the husband, the assessee. Mr. Karan Thapar, under the family pension scheme run by the company. As per commitment of the employer of the deceased wife, they would continue paying her husband i.e. assessee Mr. Karan Thapar until his death. It was also noted that Mr. Karan Thapar is having issues from his deceased wife. The assessee was a resident but not ordinarily resident till 1999 -2000 and became resident and ordinarily resident w.e.f. asst. yr. 2000 -01 and has been receiving the family pension regularly from RBS, UK, who was employer of his deceased wife. The AO had taxed family pension received by the assessee in UK and this assessment order was challenged by the assessee before the CIT(A). The CIT(A) granted relief for the assessee holding that the family pension received by the assessee was covered under art. 23(3) of the DTAA between India and UK and cannot be taxed in India when source country i.e. UK has already taxed these amounts. Against this order of the CIT(A), the Revenue has preferred an appeal before the Tribunal and the Tribunal remitted this issue back to the file of AO to consider the same in the light of the submissions of the assesses. During the second round, the AO again decided the issue of pension against the assessee and held that the amount of family pension received by the assessee was taxable under art. 23(1) of the DTAA between India and UK. The aggrieved assessee again filed first appeal before the CIT(A) which was allowed by holding that the amount received by the assessee from RBS, the employer of the deceased wife of the assessee, as family pension cannot be taxed in India in view of the provisions of art. 23(3) of the India UK DTAA treaty. Now, the aggrieved Revenue is before this Tribunal in these second appeals. We have heard rival arguments of both the parties and carefully perused the record placed before us including first paper book filed by the assessee spread aver 58 pages, second paper book spread over 30 pages containing decisions relied by the assessee and written brief synopsis. Learned Departmental Representative submitted that "pension" and "family pension" are two separate terms with different meanings and family pension received by the assessee does not fall under art. 20(1) of Indo -UK, DTAA rather the same falls under art. 23(1) of India UK DTAA which is taxable in India in the hands of assessee. The Departmental Representative further submitted that the CIT(A) wrongly held that family pension received by the assessee from UK is covered under art. 23(3) of Indo UK DTAA. The Departmental Representative also contended that the CIT(A) erred in law and on facts of the case in holding that the amount of family pension received by the assessee is covered by art. 23(3) of Indo -UK DTAA overlooking the provisions of art. 23(1) of the said agreement.;


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