DTAA remittance relief for shipping freight income applies only to amounts proved remitted to the other State.

Freight income from Singapore-resident shipping operations was treated as covered by the India-Singapore DTAA exemption, but the limitation-of-relief clause in Article 24 restricted that benefit where the other State taxes income on a remittance basis. Additional evidence and the remand report showed further remittances to Singapore, so treaty relief remained available for the portion proved to have been remitted. Exemption could not be denied for remitted income, but the balance, for which no proof of remittance was furnished, remained taxable in India. The note therefore states that relief was allowed only to the extent of established remittance, with the unproved portion sustained to tax.

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Issues: (i) Whether freight income of a Singapore-resident shipping beneficiary was entitled to exemption in India under the India-Singapore DTAA only to the extent the income was remitted to Singapore, and whether the balance could be taxed in India for want of proof of remittance.

Analysis: The freight income from shipping operations was covered by the treaty exemption, but Article 24 of the DTAA limited that relief where the other contracting State taxes the income by reference to remittance or receipt rather than on accrual. The assessee produced additional evidence before the appellate authority showing further remittances to Singapore, and the remand report accepted remittance of a higher amount than that accepted at assessment. On the record, treaty relief could not extend to amounts for which no proof of remittance was furnished, while the remitted portion remained eligible for exemption. The Tribunal followed the view that the limitation-of-relief clause operates only to the extent the income is not shown to have been remitted to the other contracting State.

Conclusion: Relief under the DTAA was allowed for the freight charges proved to have been remitted to Singapore, and the balance was held taxable in India.

Final Conclusion: The addition was sustained only to the extent of freight income for which remittance to Singapore was not established, and the appeal succeeded in part.

Ratio Decidendi: Where treaty relief is limited by a limitation-of-relief clause tied to remittance, exemption cannot be denied for income proved to have been remitted to the other contracting State, but may be restricted for the unproved balance.

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