COMMISSIONER OF INCOME TAX Vs. MUTHAIAH R M

JUDGEMENT

(1.) IN respect of the assessment year 1982-83, the following question has been referred under section 256(1) of the INcome-tax Act, 1961 ("the Act" for short) :

(2.) THE assessee is an individual and resident in India. During the previous year relevant to the assessment year 1982-83, which is now under consideration, the assessee had earned income in Malaysia and had claimed it as exempt from tax in India in view of the Double Taxation Avoidance agreement between India and Malaysia. THE Income-tax Officer did not accept the contention of the assessee; he included the income earned by the assessee in Malaysia in the total income of the assessee and stated that credit would be given after the assessee had paid tax on this income in Malaysia. THE assessee appealed before the Commissioner of Income-tax (Appeals). THE Commissioner of Income-tax (Appeals), following the decision of the Special Bench of the Tribunal, Madras, in the case of Kulandayan Chettiar (3 ITD 426), held that the income earned in Malaysia was exempt from tax in India by virtue of the double taxation avoidance agreement. THE Department felt aggrieved by the decision of the commissioner of Income-tax (Appeals) and came up in appeal before the Tribunal. THE Tribunal, following the above-stated decision of the Special Bench of the Tribunal, upheld the order of the Commissioner of Income-tax (Appeals).

(3.) THEREFORE, the assessee can claim the benefit of the avoidance of double taxation only by proving that he has paid tax in respect of the income in question in Malaysia.