M.M. Cherian, A.M. - (1.) IN view of the common grounds involved in these two appeals by the same assessee, they are consolidated in a common order for the sake of convenience. These appeals have been filed by the assessee M/s Durametallic (INdia) Ltd., Karapakkam village, Chennai, against the orders passed by the CIT(A)-I, Madras, for the asst. yrs. 1987-88 and 1988-89.
(2.) The dispute in these appeals is regarding the manner of computation of double income-tax relief under the Agreement for Avoidance of Double Taxation between the Government of India and the Government of Singapore. During the previous years relevant for the asst. yrs. 1987-88 and 1988-89 the assessee was in receipt of royalty from M/s Durametallic Asia Ltd., Singapore. The assessee being a resident, the income by way of royalty from the foreign concern was includible in its total income, On the royalty amount the assessee was entitled to deduction under Section 80-0 of the IT Act to the extent of 50 per cent of the income so received and brought to India. Accordingly, on the balance amount tax was levied under the IT Act. On the income subjected to tax in India and Singapore the assessee is entitled to double income-tax relief in terms of the agreement between the two countries on the amount of Singapore tax payable on the income subjected to tax in both countries, but not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax. For the asst. yr. 1987-88 the assessee claimed double income-tax relief on a sum of Rs. 7,58,918, as the tax payable under the tax laws of Singapore in respect of the royalty income calculated as under: JUDGEMENT_8142_TLIT0_20010.htm The AO did not accept the assessee's computation of the double income-tax relief as he was of the view that after the deduction under Section 80-0 only 50 per cent of the royalty was subjected to tax in India and so the relief was allowable to the extent of the tax payable in Singapore on that amount. Accordingly, the AO allowed double income-tax relief on a sum of Rs. 3,79,459 calculated as shown below : JUDGEMENT_8142_TLIT0_20011.htm In the assessment for the asst. yr. 1987-88 the AO thus allowed relief to the extent of Rs. 3,79,459 only as against the assessee's claim of Rs. 7,58,918. For the asst. yr. 1988-89 the assessee was in receipt of royalty of Rs. 14,38,673 which was taxed in Singapore at 40 per cent. In this year also the assessee claimed relief to the extent of Rs. 5,75,467 i.e., tax payable in Singapore on the entire sum of Rs. 14,38,673. The AO noticed that after the deduction under Section 80-0 only the balance amount of Rs. 7,19,376 was subjected to tax in India. The tax payable in Singapore at 40 per cent was worked out on the sum of Rs. 7,19,336 and on that basis the AO allowed relief to the extent of Rs, 2,87,735. Thus for the asst. yr, 1988-89 though the assessee had claimed relief to the extent of Rs. 5,75,469, the AO allowed only Rs. 2,87,735.
(3.) THOUGH the assessee took up the matter in appeal, for both years the CIT(A) held that the relief as allowed by the AO was correct and that in view of the deduction allowed under Section 80-0, only the balance amount could be considered as income subjected to tax in both countries on which alone relief had to be worked out. Aggrieved with the orders passed by the first appellate authority the assessee has filed these appeals before the Tribunal.;