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Issues: Whether income from slot hire charges formed part of income from shipping operations covered by Article 8 of the Double Taxation Avoidance Agreement between India and UAE and was therefore not taxable in India.
Analysis: The order of the Authority for Advance Ruling was read as a whole and was found to have specifically dealt with shipping operations comprehensively, including income from hire of slots as part of the income arising from operation of ships in international traffic. The ruling had categorically held that the assessee, being a resident of UAE, was entitled to the benefit of Article 8 of the treaty and that the more beneficial treaty provision would prevail over section 44B of the Income-tax Act, 1961. The earlier appellate directions had also noted that the advance ruling covered the relevant shipping income, and the Revenue authorities were not justified in treating the slot hire receipts as business income taxable in India.
Conclusion: The slot hire charges were held to be covered by Article 8 of the treaty and were not liable to tax in India, in favour of the assessee.
Ratio Decidendi: Where an advance ruling, read in its entirety, specifically brings shipping-related receipts within Article 8 of the applicable treaty, such treaty protection prevails over domestic taxation provisions and the covered income cannot be taxed in India.
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