LexPRINCIPAL COMMISSIONER OF INCOME TAX-10 versus M/S KRISHAK BHARTI COOPERATIVE LTD.
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[2023] 12 S.C.R. 590 : 2023 INSC 834 590 CASE DETAILS PRINCIPAL COMMISSIONER OF INCOME TAX-10 v. M/S KRISHAK BHARTI COOPERATIVE LTD. (Civil Appeal No. 836 of 2018) SEPTEMBER 15, 2023 [B. V. NAGARATHNA AND PRASHANT KUMAR MISHRA, JJ.] HEADNOTES Issue for consideration: Whether the dividend income earned by the assessee is taxable, although exempted under Omani Tax Laws to entitle the assessee to the benefits of the Double Taxation Avoidance Agreement (DTAA) between India and Oman. Income Tax – DTAA and Omani Tax Laws – Benefit to the assessee under: Held: A clarification letter dated 11.12.2000 (interpreting the provisions contained in Article 8 and Article 8 (bis) of the Omani Tax Laws) addressed by the Secretary General for Taxation, Sultanate of Oman, Ministry of Finance was issued which stated the dividend distributed by all companies, including the tax-exempt companies would be exempt from payment of income tax in the hands of the recipients – By extending the facility of exemption, the Government of Oman intended to achieve its object of promoting development within Oman by attracting investments – Since the assessee has invested in the project by setting up a permanent establishment in Oman, as the JV is registered as a separate company under the Omani laws, it is aiding to promote economic development within Oman and achieve the object of Article 8 (bis) – A plain reading of Article 8 and Article 8 (bis) would manifest that under Article 8, dividend is taxable, whereas, Article 8(bis) exempts dividend received by a company from its ownership 591 of shares, portions, or shareholding in the share capital in any other company – Thus, Article 8(bis) exempts dividend tax received by the assessee from its PE in Oman and by virtue of Article 25, the assessee is entitled to the same tax treatment in India as it received in Oman – Insofar as the argument concerning the assessee not having PE in Oman is concerned, it is apparent that the assessee’s establishment in Oman has been treated as PE from the very inception up to the year 2011 – There is no reason as to why all of a sudden, the assessee’s establishment in Oman would not be treated as PE when for about 10 years it was so treated, and tax exemption was granted basing upon the provisions contained in Article 25 read with Article 8 (bis) of the Omani Tax Laws – Thus, appellant has not been able to demonstrate as to why the provisions contained in Article 25 of DTAA and Article 8 (bis) of the Omani Tax Laws would not be applicable. [Paras 15, 16, 17, 18 and 20] OTHER CASE DETAILS INCLUDING IMPUGNED ORDER AND APPEARANCES CIVIL APPELLATE JURISDICTION: Civil Appeal No. 836 of 2018. From the Judgment and Order dated 21.04.2017 of the High Court of Delhi at New Delhi in ITA No.578 of 2016. With Civil Appeal Nos.3369 of 2019, 2256 of 2018 and 5900, 5902, 5901 of 2023. Appearances: Balbir Singh, ASG, Arijit Prasad, Arvind P Datar, Ajay Vohra, Sr. Advs., Rupesh Kumar, Ms. Rukhmini Bobde, Anirudh Sharma-II, Indarjit Prasad, Vijaynand Tripathi, Raj Bahadur Yadav, M/s. K J John and Co, Pratap Venugopal, Ms. Surekha Raman, Prashant Kumar Nair, Abhishek Anand, Shreyash Kumar, Ms. Kavita Jha, Vaibhav Kulkarni, Udit Naresh, Advs. for the appearing parties. PRINCIPAL COMMISSION ER OF INCOME TAX-10 v. M/S KRISHAK BHARTI COOPERATIVE LTD. SUPREME COURT REPORTS [2023] 12 S.C.R. 592 JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT PRASHANT KUMAR MISHRA, J. Delay condoned in SLP (C) Diary No. 4647 of 2018 and SLP (C) Diary No. 15333 of 2023. 2. Leave granted in SLP (C) No. _____ @ Diary No. 4647 of 2018, SLP(C) No. 11204 of 2023 and SLP (C) No. _____ @ Diary No. 15333 of 2023. 3. This judgment governs the disposal of Civil Appeal No. 836 of 2018, C.A. No. 3369 of 2019, Civil Appeal No. 2256 of 2018 and the appeals arising out of SLP (C) Diary No. 4647 of 2018, SLP(C) No. 11204 of 2023 and SLP (C) @ Diary No. 15333 of 2023. BACKGROUND FACTS: 4. The assessee is a multi-State Co-operative Society registered in India, under the administrative control of the Department of Fertilizers, Ministry of Agriculture and Co-operation, Government of India. In the course of its business of manufacturing fertilizers, it entered into a joint venture with Oman Oil Company to form the Oman Fertilizer Company SAOC (for short ’OMIFCO’ or ‘the JV’), a registered company in Oman under the Omani laws. The assessee has 25% share in the JV. The JV manufactu
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