Treaty exemption for inland haulage charges upheld where receipts were directly connected with international shipping operations.

Inland haulage charges received by a non-resident shipping company were treated as exempt income under Article 8 of the India-Belgium DTAA because they were directly connected with the operation of ships in international traffic. The tribunal relied on its earlier view in the assessee's own case, noted that the same receipt had already been held incidental and closely linked to ship operations, and found no distinguishing facts for the year under review. On that basis, the Assessing Officer's addition was deleted and the Revenue's challenge to the exemption failed.

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Issues: Whether inland haulage charges received by a non-resident shipping company were exempt as income derived from the operation of ships in international traffic and as an activity directly connected with shipping under Article 8 of the DTAA between India and Belgium.

Analysis: The claim was examined in the light of Article 8, which exempts income from operation of ships in international traffic and extends to activities directly connected with shipping. The same receipt had earlier been held, in the assessee's own case, to be incidental and closely connected with the direct operations of ships, and that view had been followed in subsequent years. The facts for the year in question were identical, and no distinguishing feature was shown to depart from the earlier view.

Conclusion: Inland haulage charges were held to fall within the exempt category under Article 8, and the addition made by the Assessing Officer was rightly deleted.

Final Conclusion: The Revenue's challenge to the exemption of inland haulage charges failed, and the relief granted to the assessee was sustained.

Ratio Decidendi: Income from inland haulage charges is exempt where it is found to be directly connected with the operation of ships in international traffic under the applicable treaty provision.

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