Treaty protection under the India-Singapore DTAA cannot be denied where freight income is taxed in Singapore on accrual basis.

Article 24 of the India-Singapore DTAA cannot be used to deny treaty relief where the relevant freight income is Singapore-sourced and taxable in Singapore on an accrual basis. The limitation-of-benefits condition applies only when source-state relief is linked to taxation in the residence state by reference to remittance or receipt, not where the income is taxed on the full amount on accrual. On the facts described, Singapore tax authority confirmation and the accountant's certificate showed the income was included in global income and taxed in Singapore, so the precondition for Article 24 was absent and no further proof of remittance to Singapore was required. The freight income from ships in international traffic remained taxable only in Singapore.

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Issues: Whether the assessee was entitled to treaty protection under Article 8 of the India-Singapore Double Taxation Avoidance Agreement and whether Article 24 could be invoked to deny such benefit on the ground that the freight was remitted to a bank account outside Singapore.

Analysis: Article 24 operates only where the source-state exemption or reduced-rate relief is linked to taxation in the residence state by reference to remittance or receipt, rather than by reference to the full amount of income. On the facts found, the freight income was shown to be Singapore-sourced and taxable in Singapore on an accrual basis, not on a remittance basis. The material placed on record, including the Singapore tax authority confirmation and the accountant's certificate, showed that the income had been included in global income and brought to tax in Singapore. In that situation, the precondition for applying the limitation of benefits clause was absent, and the burden of showing actual remittance to Singapore did not arise.

Conclusion: Article 24 could not be used to deny treaty benefit, and the freight income from operation of ships in international traffic was taxable only in Singapore. The addition in India was therefore unsustainable and the assessee succeeded.

Ratio Decidendi: A limitation-of-benefits clause tied to remittance or receipt in the residence state cannot be invoked where the relevant income is taxable there on an accrual basis and not on a remittance basis.

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