only grievance raised by revenue in this appeal is as follows: "On facts and in circumstances of case and in law, learned CIT(A) erred in directing Assessing Officer to allow benefit of DTAA merely on production of Xerox copy of tax residency certificate issued by Ministry of Finance and Industry in UAE without appreciating fact that assessee-company failed to produce any evidence that it was liable to pay taxes or paying taxes in UAE and that provisions of Double Taxation Avoidance Agreement did not apply to any person where income was not liable to be taxed twice by existing laws of both Contracting States". 2. short factual matrix, in which this issue arises, is this. assessee is shipping line based in United Arab Emirates. In relevant previous year, assessee had taxable income of Rs. 28,35,628 from shipping operations. assessee's claim was that in terms of article 8 of Indo-UAE Double Taxation Avoidance Agreement (205 ITR St. 49), assessee's income was liable to tax only in country of domicile i.e., UAE, but this contention was rejected by Assessing Officer on ground that assessee 'is not paying taxes in UAE'. Assessing Officer relied upon decision of AAR in case of Cyril Eugene Pereria, In re [1999] 239 ITR 650 in support of proposition that provisions of DTAA do not apply to any case which 'same income is not liable to be taxed twice by existing laws of both Contracting States'. Assessing Officer also noted that 'the assessee has failed to furnish proof/evidences in support of claim of being eligible for benefit of India-UAE DTAA and, consequently, assessee has failed to discharge onus on it to prove that it is liable to pay tax in UAE'. It was in this backdrop that assessee's claim for non-taxability of shipping income in India was rejected by Assessing Officer. Aggrieved, assessee carried matter in appeal before CIT(A). CIT(A) reversed action of Assessing Officer by rather brief operative order which is reproduced below for ready reference: "I have considered submissions of appellant counsel and pursued order made by Assessing Officer. appellant has not been allowed benefit of DTAA only because appellant had not produced any evidence before Assessing Officer that he is tax resident of UAE. As appellant has submitted Xerox copy of tax residency certificate issued by Ministry of Finance & Industry in UAE, Assessing Officer is directed to allow benefit of DTAA to appellant for assessment year 1998-99." Aggrieved by order of CIT(A), revenue is in appeal before us. 3. We have heard learned Departmental Representative but none appeared for assessee. We have also perused material on record and duly considered applicable legal position and factual matrix of case. 4. impugned order passed by CIT(A) takes rather superficial view of matter and has conveniently ducked core issue really required to be adjudicated upon. It has simply brushed aside real objection raised by Assessing Officer which was that in order to avail benefits of India-UAE DTAA, person need not only be resident of one of Contracting State but should also be 'liable to tax' therein. Then, there is next question about connotations of expression 'liable to tax'. Does it mean liability at present or does it also cover potential future liability? residency certificate, by itself, does not decide matter one way or other because what, according to Assessing Officer, is important is whether assessee was liable to tax in UAE or not. Therefore, whether assessee was resident in UAE or not would not have really mattered from point of view of Assessing Officer. For this reason, we are unable to approve reasoning and stand of CIT(A). Having held so, next question that we are required to address ourselves to is whether or not Assessing Officer was justified in raising objection that he did. Is it really liability to pay tax in UAE which is sine qua non to avail benefits of India-UAE DTAA or fiscal domicile or residency in UAE per se will be sufficient for assessee to claim benefits of India-UAE DTAA? Is it taxation liability at present which is material for this purpose or is it even prospect of future tax liability which is sought to be prevented by said DTAA? 5. As for Assessing Officer's reliance on ruling given by Authority for Advance Ruling in Cyril Eugene Pereria's case (supra), we deem it necessary to produce following extracts from judgment of Hon'ble Supreme Court in case of Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706, at page 742 wherein Their Lordships of Hon'ble Supreme Court had occasion to deal with said AAR ruling: "The respondents placed great reliance on decision by Authority for Advance Ruling constituted under section 245-O of Income-tax Act, 1961, in Cyril Eugene Pereria's case [1999] 239 ITR 650 (AAR). Section 245S of Act provides that Advance Ruling pronounced by Authority under section 245R will be binding only: '(a) on applicant who had sought it; (b) in respect to transaction in relation to which ruling had been sought; (c) on Commissioner, and income-tax authorities subordinate to him, in respect to applicant and said transaction.' It is, therefore, obvious that, apart from whatever its persuasive value, it would be of no help to us. Having perused order of Advance Ruling Authority, we are not persuaded." [Emphasis supplied] judgments of Hon'ble Supreme Court are binding on us under article 141 of Constitution of India; rulings of Authority for Advance Ruling, whatever be their persuasive value, are not. words of Hon'ble Supreme Court are clear, categorical and unambiguous. Once Hon'ble Supreme Court declines to be persuaded by ruling given by Authority for Advance Ruling in Cyril Eugene Pereria's case (supra), it cannot be open to us to follow said ruling. In case of Asstt. Collector of Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172 at page 180, Hon'ble Supreme Court has, inter alia, observed as follows: "We desire to add and as was said in Cassell & Co. Limited v. Broome [1972] AC 1027 (HL), we hope it will never be necessary to say so again that "in hierarchical system of courts" which exists in our country, "it is necessary for each lower tier" . . . . . "to accept loyally decisions of higher tiers". "It is inevitable in hierarchical system of courts that there are decisions of supreme appellate Tribunal which do not attract unanimous approval of all supreme appellate Tribunal which do not attract unanimous approval of all members of judiciary . . . . But judicial system works only if someone is allowed to have last word and that last word, once spoken, is loyally accepted" (See Observations of Lord Hailsham and Lord Diplock in Broome v. Cassell ). wisdom of Court below has to yield to higher wisdom of Court above." We respectfully follow higher wisdom of Courts above, and decline to approve Assessing Officer's reliance upon ruling given by Authority for Advance Ruling in Cyril Eugene Pereria's case (supra). 6. Undoubtedly, in Cyril Eugene Pereria's case (supra), Hon'ble Authority for Advance Ruling, deviating from stand taken by it in earlier rulings including ruling in Mohsinally Alimohammed Rafik, In re [1995] 213 ITR 317, concluded that "an individual who is not liable to pay tax under UAE law cannot claim any relief from only tax on income which is payable in India under agreement" and that "the provisions of Double Taxation Avoidance Agreement do not apply to any case where same income is not liable to be taxed twice by existing laws on both Contracting States". However, in Azadi Bachao Andolan's case (supra), Their Lordships of Hon'ble Supreme Court, after referring to said ruling and after elaborate discussions on various aspects of this issue, concluded that "it is . . . . not possible for us to accept contentions so strenuously urged by respondents that avoidance of double taxation can arise only when tax is actually paid in one of Contracting States". reasoning given by Their Lordships included following: "According to Klaus Vogel "Double Taxation Conventions establishes independent mechanism to avoid double taxation through restriction of tax claims in areas where overlapping tax claims are expected, or at least theoretically possible. In other words, Contracting States mutually bind themselves not to levy taxes or to tax only to limited extent in cases when treaty reserves taxation for other Contracting State either entirely or in part. Contracting States are said to waive 'tax claims' or more illustratively to divide 'tax sources', 'taxable objects', amongst themselves". Double taxation avoidance treaties were in vogue even from time of League of Nations. experts appointed in early 1920s by League of Nations describe this method of classification of items and their assignments to Contracting States. While English lawyers called it 'classification and assignment rule', German jurists called it 'the distributive rule' (Verteilungsnorm). To extent that exemption is agreed to, its effect is in principle independent of both whether Contracting State imposes tax in situation to which exemption applies, and irrespective of whether State actually levies tax. Commenting particularly on German Double Taxation Convention with United States, Vogel comments: "Thus, it is said that treaty prevents not only 'current' but also merely 'potential' double taxation". Further, according to Vogel, "only in exceptional cases, and only when expressly agreed to by parties, is exemption in one of Contracting States dependent upon whether income or capital is taxable in other Contracting State, or upon whether it is actually taxed there." It is, therefore, not possible for us to accept contentions so strenuously urged by respondents that avoidance of double taxation can arise only when tax is actually paid in one of Contracting States." Clearly, therefore, there is no meeting ground between ruling given by Authority for Advance Ruling in Cyril Eugene Pereria's case (supra) and judgment delivered by Hon'ble Supreme Court in Azadi Bachao Andolan's c s e (supra). choice, however, poses no difficulty in light of elementary legal position that judgments of Hon'ble Supreme Court have binding force on all of us. Much as we respect Hon'ble Authority for Advance Ruling, we regret our inability to follow ruling which, in our humble understanding, has been clearly disapproved by Hon'ble Supreme Court. It is not even open to us, even in case in which our understanding of issue on merits concurs with that of Hon'ble Authority for Advance Ruling in Cyril Eugene Pereria's case (supra), to follow that school of thought. 7. Learned Departmental Representative has invited our attention to ruling given by Authority for Advance Ruling in case of Abdul Razak A. Menon, In re [2005] 276 ITR 306 which supports case of revenue and is said to be on exactly same material facts. We are, however, unable to accept this plea and we decline to treat this as sort of, to use phraseology employed in legal parlance, covered matter. As Hon'ble Supreme Court has duly taken of in Azadi Bachao Andolan's case (supra), ruling given by Authority for Advance Ruling is not even binding on Commissioner of Income-tax, and authorities subordinate thereto, in any case except in case of very assessee in which such ruling is given and even in such case it is binding in respect of transaction in respect of which ruling is given. Whatever be respect and deference judicial authorities indeed have for rulings given by Authority, Authority for Advance Ruling, not being part of judicial hierarchy, cannot lay down binding precedence for anyone - revenue, assessees or appellate authorities. By no stretch of logic, therefore, ruling given by Hon'ble Authority of Advance Ruling has any precedence value in general. Therefore, learned Departmental Representative's reliance on ruling given in Abdul Razak A. Menon's case (supra) by itself is not sufficient to decide matter one way or other. Learned Departmental Representative's contention is that as non-corporate entities are not taxable entities under UAE Tax Decree, 1969, such non-corporate entities, even though based in UAE, cannot be treated as 'resident' for purposes of India-UAE DTAA. Our attention is also invited to learned Assessing Officer's observations to effect that "the provisions of DTAA do not apply to any case which same income is not liable to be taxed twice by existing laws of both Contracting States" and that "since assessee has failed to prove that it is paying taxes in UAE, DIT relief sought by assessee is rejected" but it is very proposition underlying these observations which was rejected by Hon'ble Supreme Court holding that "it is . . . . not possible for us to accept contentions so strenuously urged by respondents that avoidance of double taxation can arise only when tax is actually paid in one of Contracting States". As we have noted earlier also, revenue is on record to have opposed very argument that revenue has taken in present case, as evident from Hon'ble Supreme Court's following observation: "The appellants (i.e., Union of India) contend that, acceptance of respondent's submission that double taxation avoidance is not permissible unless tax is paid in both countries is contrary to intendment of section 9 0 . It is urged that clause (b) of sub-section (1) of section 90 applies to situation where income-tax has been paid in both countries, but clause (b) deals with situation of avoidance of double taxation of income. Inasmuch as Parliament has distinguished between two situations, it is not open to Court of law to interpret clause (b) of section 90 - sub-section (1) as if it were same as situations contemplated under clause (a)." very contention which has been raised by revenue in this case was successfully challenged by Union of India before Hon'ble Supreme Court. It cannot be open to us to take any other view of matter than view so taken by Hon'ble Supreme Court. 8. Although Assessing Officer's objection to applicability of India-UAE tax treaty was only on ground that provisions of double taxation avoidance agreements do not come into play unless it is established that assessee is paying tax in both countries in respect of same income, in grounds of appeal before us it is also contended that assessee-company failed to produce any evidence to effect that it was 'liable to pay taxes' in UAE. question then arises whether existing liability to pay taxes in UAE is sine qua non to avail benefit of India-UAE tax treaty in India. On this issue also, we find guidance from judgment of Hon'ble Supreme Court in case of Azadi Bachao Andolan (supra). Referring to Klaus Vogel's Commentary on Double Taxation Conventions, Their Lordships, inter alia, observed as follows: "In other words, Contracting States mutually bind themselves not to levy taxes or to tax only to limited extent in cases when treaty reserves taxation for other Contracting State either entirely or in part. Contracting States are said to waive 'tax claims' or more illustratively to divide 'tax sources', 'taxable objects', amongst themselves. Double taxation avoidance treaties were in vogue even from time of League of Nations. experts appointed in early 1920s by League of Nations describe this method of classification of items and their assignments to Contracting States. While English lawyers called it 'classification and assignment rule', German jurists called it 'the distributive rule' (Vertei-lungsnorm). To extent that exemption is agreed to, its effect is in principle independent of both whether Contracting State imposes tax in situation to which exemption applies, and irrespective of whether State actually levies tax. Commenting particularly on German Double Taxation Convention with United States, Vogel comments: 'Thus, it is said that treaty prevents not only 'current' but also merely 'potential' double taxation'." [Emphasis supplied] It is thus clear that tax treaty not only prevents 'current' but also 'potential' double taxation. Therefore, irrespective of whether or not UAE actually levies taxes on non-corporate entities, once right to tax UAE residents in specified circumstances vests only with Government of UAE, that right, whether exercised or not, continues to remain exclusive right of Government of UAE. As noted above, exemption agreed to under 'assignment' or 'distributive' rule, is independent of 'whether Contracting State imposes tax in situation to which exemption implies'. In case of John N. Gladden v. Her Majesty Queen 85 TC 5188, which was quoted with approval by Hon'ble Supreme Court in Azadi Bachao Andolan's case (supra), Federal Court of Canada was observed that "the non-resident can benefit from exemption (under treaty) regardless of whether or not he is taxable on that capital gain in his own country. If Canada or US were to abolish capital gains tax completely, while other country did not, resident of country which has abolished capital gains would still be exempt from capital gains in that other country". It is thus clear that taxability in one country is not sine qua non for availing relief under treaty from taxability in other country. All that is necessary for this purpose is that person should be 'liable to tax in Contracting State by reason of domicile, residence, place of management, place of incorporation or any other criterion of similar nature' which essentially refers to fiscal domicile of such person. In other words, if fiscal domicile of person is in Contracting State, irrespective of whether or not that person is actually liable to pay tax in that country, he is to be treated as resident of that Contracting State. expression 'liable to tax' is not to read in isolation but in conjunction with words immediately following it i.e., 'by reason of domicile, residence, place of management, place of incorporation or any other criterion of similar nature'. That would mean that merely person living in Contracting State should not be sufficient, that person should also have fiscal domicile in that country. These tests of fiscal domicile which are given by way of examples following expression 'liable to tax by reason of' i.e., domicile, residence, place of management, place of incorporation etc. are no more than examples of locality related attachments that attract residence type taxation. Therefore, as long as person has such locality related attachments which attract residence type taxation, that 'person' is to be treated as resident and this status of being 'resident' of Contracting State is independent of actual levy of tax on that person. Viewed in this perspective, we are of considered opinion that being 'liable to tax' in Contracting State does not necessarily imply that person should actually be liable to tax in that Contracting State by virtue of existing legal provision but would also cover cases where that other Contracting State has right to tax such persons - irrespective of whether or not such right is exercised by Contracting State. In our humble understanding, this is legal position emerging out of Hon'ble Supreme Court's judgment in Azadi Bachao Andolan's case (supra). plea taken by revenue that assessee was not 'liabile to tax', which was anyway not taken by Assessing Officer or before CIT(A), is also not sustainable in law either. 9. For reasons set out above, and even though we do not approve reasoning adopted by CIT(A), we approve conclusion arrived at by CIT(A). His having arrived at right conclusion may have been fortuitous but what is material is that he reached right conclusion. We approve his conclusion and decline to interfere in matter. 10. Before parting with matter, we may add that instead of allowing such matters, as is dispute before us, to be subjected to confusing signals resulting in uncertainty and prolonged litigation, it is certainly more desirable for Government to take clear cut stand on issue or let matter be resolved at level of Governments of Contracting States. That perhaps is better solution for quickly resolving disputes on such fundamental aspect of tax treaty as to who will be eligible for benefits of that tax treaty. We hope that Government will resolve this matter once for all and would not allow this uncertainty to last for long. We leave it at that. 11. In result, appeal is dismissed. *** ASSISTANT DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) v. GREEN EMIRATE SHIPPING & TRAVELS