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of <h1>Tribunal remands case for tax investigation in Singapore</h1> <h3>M/s Navship Marine Services (P) Ltd. Agent of M/s Voyage Ship Management (P) Ltd. Versus Income Tax Officer (International Taxation), Visakhapatnam</h3> M/s Navship Marine Services (P) Ltd. Agent of M/s Voyage Ship Management (P) Ltd. Versus Income Tax Officer (International Taxation), Visakhapatnam - TMI Issues Involved:1. Applicability of Article 24 of the Indo-Singapore Double Taxation Avoidance Agreement (DTAA) versus Article 8.2. Requirement of evidence for income remittance or accrual for tax exemption under DTAA.Detailed Analysis:1. Applicability of Article 24 of the Indo-Singapore DTAA versus Article 8:The core issue debated was whether Article 8 or Article 24 of the DTAA should apply to the income derived from the operation of the vessel M.V. Arnad Queen by a non-resident shipping company. The Representative assessee argued that the income is taxable in Singapore on an accrual basis, thus Article 8, which provides for the taxation of profits derived from the operation of ships in international traffic only in the state of residence, should apply. The AO, however, applied Article 24, which limits the relief if the income is taxable in the contracting state on a remittance basis.The Tribunal referred to the decision of the Hon’ble High Court of Gujarat in the case of M.T. Maersk Mikage & Ors. Vs. Director of Income Tax (International Taxation) 242 Taxman 0300, which clarified that if the income is taxable in Singapore on an accrual basis, Article 8 prevails over Article 24. The Tribunal noted that the Inland Revenue Authority of Singapore had confirmed that the freight income is taxed on an accrual basis, thus Article 24 should not apply, and Article 8 should govern the taxation.2. Requirement of Evidence for Income Remittance or Accrual for Tax Exemption under DTAA:The Representative assessee failed to provide evidence that the income from the voyage was included in the tax return filed in Singapore or that it was taxed on an accrual basis. The Tribunal emphasized the necessity of such evidence to determine the applicability of Article 8 over Article 24. The Tribunal cited the Hon’ble High Court's decision, which relied on a certificate from the Inland Revenue Authority of Singapore confirming the tax treatment of the income.The Tribunal concluded that the issue requires further examination. It directed the AO to reexamine the evidence regarding the inclusion of the income in the tax return filed in Singapore or obtain a certificate from the Inland Revenue Authority confirming that the shipping income is taxed on an accrual basis. The Tribunal allowed the appeal for statistical purposes, remitting the matter back to the AO for a detailed examination.Conclusion:The appeal was allowed for statistical purposes, with the Tribunal remanding the case to the AO for further investigation into the tax treatment of the income in Singapore. The Tribunal directed the assessee to provide necessary information or obtain a certificate from the Inland Revenue Authority of Singapore to substantiate the claim that the income is taxed on an accrual basis, thereby invoking Article 8 of the DTAA. The final determination will depend on the evidence provided by the assessee regarding the tax treatment of the income in Singapore.
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