Treaty exemption for Singapore resident capital gains upheld; Article 24 limitation did not block Article 13(4) relief.

Article 13(4) of the India-Singapore tax treaty exempts capital gains on alienation of property by a Singapore resident from Indian tax, and Article 24 is a limitation provision aimed at source-country relief where the other state taxes income on a remittance basis. On the stated facts, the Singapore tax certificate showed accrual-basis taxation in Singapore as Singapore-sourced income, without any remittance condition. The Tribunal followed coordinate bench and Gujarat High Court authority and concluded that Article 24 was not triggered merely because remittance to Singapore was not shown. The treaty benefit under Article 13(4) therefore remained available and the capital gains were not taxable in India.

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Issues: Whether the limitation of relief under Article 24 of the India-Singapore Double Taxation Avoidance Agreement applied so as to deny the assessee the benefit of Article 13(4) in respect of capital gains on sale of debt instruments.

Analysis: Article 13(4) provides that gains from the alienation of property by a resident of Singapore are taxable only in Singapore. Article 24 is a limitation provision intended to operate where the source-country relief is in the nature of exemption or reduced rate and the other Contracting State taxes the income on a remittance basis. On the facts, the Singapore tax authority certificate stated that the relevant income was treated as Singapore-sourced and taxed in Singapore on accrual basis, without reference to remittance or receipt. The Tribunal followed the coordinate bench decisions and the Gujarat High Court authority relied upon, and held that Article 24 was not attracted merely because the income was not shown to have been remitted to Singapore.

Conclusion: The denial of treaty benefit was unsustainable. The capital gains were not taxable in India under Article 13(4), and Article 24 did not restrict the exemption. The issue is decided in favour of the assessee.

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