Accrual-based taxation under the India-Singapore DTAA preserved Article 8 protection for shipping income, making the remittance clause inapplicable.

Article 24(1) of the India-Singapore DTAA applies only where the other Contracting State taxes income by reference to remittance or receipt, not where tax is levied on accrual. Because the Singapore authority certificate showed the shipping income was assessable in Singapore on an accrual basis, the remittance-based limitation clause failed. Article 8 therefore remained operative, and treaty protection for the Singapore resident enterprise's shipping income could not be denied on a non-remittance basis.

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Issues: Whether Article 24(1) of the India-Singapore DTAA could be invoked to deny the benefit of Article 8 in respect of shipping income earned by a Singapore resident enterprise from voyages undertaken from India.

Analysis: Article 24(1) applies only where the other Contracting State taxes the income by reference to the amount remitted or received there, rather than on the basis of the full income accruing. The certificate issued by the Singapore tax authority showed that the shipping income was assessable in Singapore on accrual basis and not on remittance basis. In that situation, the premise for applying the limitation clause under Article 24(1) failed. The exclusivity of taxation under Article 8 also meant that India had no jurisdiction to deny treaty protection by examining remittance-wise tax treatment once Singapore residence and accrual-based assessability were established.

Conclusion: Article 24(1) was inapplicable and the assessee was entitled to the benefit of Article 8.

Final Conclusion: The denial of treaty relief was set aside and the assessee's shipping income remained protected under the treaty allocation in favour of Singapore taxation.

Ratio Decidendi: Where the foreign contracting state taxes shipping income on accrual basis, the remittance-based limitation clause in the treaty does not apply and Article 8 cannot be curtailed on the ground of non-remittance.

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