section 90 of the income-tax act, 1961

Last updated: 25 September 2007

Court :
In the itat, mumbai bench ‘A’

Brief :
section 90 of the income-tax act, 1961, read with article 25 of the indo-korea dtaa - double taxation relief - where agreement exists - assessment years 1997-98 and 1998-99 - assessee-bank was based in korea - Assessing Officer rejected assessee's claim for benefit of non/discrimination clause of indo-Korea DTAA and taxed assessee’s income at rate of 48 per cent instead of 35 per cent as claimed - whether since incentive given to co-operative bank/society cannot be extended to foreign bank, assessee had rightly been taxed at rate of 48 per cent - Held, yes FACTS The assessee-bank was based in Korea. For the relevant assessment years, the Assessing Officer rejected the assessee’s claim for the benefit of non/discrimination clause of the indo-korea dTAA and taxed the assessee’s income at the rate of 48 per cent instead of 35 per cent as claimed. on appeal, the Commissioner (Appeals) upheld the impugned order. on second appeal :

Citation :
Chohung Bank v. Deputy commissioner of Income-tax, 1(2), Mumbai t. k. sharma, judicial member and v.v.s.n. murthy, accountant member it appeal nos. 6647 and 6648 (mum.) of 2002 [assessment years 1997-98 and 1998-99]

the facts of the instant case were identical with that of the assessee's own case for the assessment year 2002-03; wherein the tribunal vide order dated 25-11-2005 (ita no.4948/mum. of 2005 held that explanation to section 90(2) introduced by the finance act, 2001 with retrospective effect from 1-4-1962 is an integral part of the section, which clearly laid down that the charging of a foreign company at a higher rate would not be regarded as less favourable as compared to domestic company. therefore, no comparison of tax rate/treatment given to co-operative society in India can be given to a foreign company. the incentive given to the co-operative bank/society cannot be extended to the foreign bank. therefore, the order passed by the Commissioner (Appeals) was liable to be upheld. [Para 9]