Income earned overseas whether taxable in India or can be claimed as exempt if PE exists overseas

Facts:

Assessee a PSU in construction and infrastructure business had PE's in other countries like Malaysia etc. Income from these overseas operations were claimed as exempt in India as they sought tax credit under "exemption" method instead of "tax credit" method. Their argument was that Article 7 of the DTAA says if the PE (source) country taxes the income then the country of residency only "may" tax the same income and not necessarily needs to tax it on compulsory basis. This was disagreed by the CIT(A) that the DTAA uses the term "may be taxed" which does not take away the right of the resident state to tax the same income. Accordingly this is taxable. However for MAT computation the overseas income may not be added as MAT provisions do not warrant or contain a similar scoping of income clause as in section 5. On appeal -

Held against the assessee that the overseas income is taxable under normal provisions of the act. 

Held in favour of the assessee that MAT provisions do not warrant inclusion of such overseas DTAA taxed income.

Applied: Assessee's own case of earlier year.

Ed. Note: The stand of the assessee is interesting to note as in certain cases the two treaty states may also grant Tax sparing as well due to economic reasons. But these are also specifically provided in the DTAA.

Case: Ircon International Ltd. v. Addl. CIT 2023 TaxPub(DT) 2478 (Del-Trib)