Revision maintainability and DTAA shipping profits relief confirmed where Singapore taxed income on accrual, not remittance, basis.

Section 264 revision remained maintainable despite an earlier withdrawn appeal because the case did not fall within the statutory bar under sub-section (4), and a bona fide concern over appellate maintainability did not prevent resort to revision. Under the India-Singapore DTAA, Article 24 did not deny Article 8 relief merely because freight income was not remitted to Singapore. The treaty restriction applies only where the other State taxes the income on a remittance basis; here, the Singapore revenue certificate showed accrual-based taxation, so the condition for Article 24 was absent and shipping profits continued to qualify for treaty relief.

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Issues: (i) Whether the assessee's revision under section 264 of the Income-tax Act, 1961 was maintainable notwithstanding the earlier withdrawal of an appeal; (ii) whether Article 24 of the India-Singapore DTAA excluded the benefit of Article 8 merely because the freight income was not remitted to Singapore.

Issue (i): Whether the assessee's revision under section 264 of the Income-tax Act, 1961 was maintainable notwithstanding the earlier withdrawal of an appeal.

Analysis: The revisional power under section 264 is available subject to the statutory bar in sub-section (4). The case did not fall within any of the excluded categories, and the earlier appeal had been withdrawn. A bona fide apprehension regarding maintainability of the appeal under the appellate provisions did not disable the assessee from invoking revision. The Commissioner had also not rejected the revision as barred.

Conclusion: The revision petition was maintainable.

Issue (ii): Whether Article 24 of the India-Singapore DTAA excluded the benefit of Article 8 merely because the freight income was not remitted to Singapore.

Analysis: Article 8 grants treaty protection to profits from shipping operations, but Article 24 limits that relief only where the other State taxes the income by reference to the amount remitted to or received there, rather than on accrual basis. The Singapore revenue certificate showed that the income was assessable in Singapore on accrual basis and not by reference to remittance. On that factual basis, the precondition for applying Article 24 was absent, and the authorities had misread the treaty by treating non-remittance alone as decisive. The additional objection that actual tax payment in Singapore was necessary was not accepted on the record before the Court.

Conclusion: Article 24 did not take away the benefit of Article 8, and the assessee was entitled to treaty relief.

Final Conclusion: The impugned revisional order and the assessment order were quashed, and the assessee succeeded in full on the issues decided.

Ratio Decidendi: Article 24 of the India-Singapore DTAA applies only when the source-state income is taxed in the other contracting State on a remittance basis and not on accrual basis; absent that condition, Article 8 continues to govern the shipping profits.

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