TaxTMI 
TaxTMI 
2014 (1) TMI 1274
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....e is shipping company incorporated in and tax resident of Singapore. Gross receipts of freight amounting to Rs.13.34 crore were shown and after application of section 44B of the Act, income was declared at the rate of 7.5% amounting to Rs.1.00 crore and odd. The Assessee claimed exemption of this income as per Article 8 of the Double Taxation Avoidance Agreement between India and Singapore (hereinafter also called `the DTAA'). A copy of Tax residency certificate was furnished to indicate that the assessee was tax resident of Singapore. The Assessing Officer noticed that the assessee earned shipping income from pool arrangement with Noratia and CMA CGM China in respect of 37 voyages, which in his opinion did not qualify for relief under Arti....
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.... 5 of the DTAA. In that view of the matter, he computed income at Rs.89.01 lacs u/s 44B of the Act by applying rate of 10% in respect of the 98 voyages. As regards the remaining 80 voyages, he computed income u/s 44B at the rate of 7.5% at Rs.33.35 lacs and allowed exemption under Article 8 of the DTAA. The Draft assessment order was challenged by the assessee before the Dispute Resolution Panel (hereinafter also called `the DRP'). Vide its Direction dated 16.09.2010, the DRP directed the Assessing Officer to examine fresh evidence in respect of 98 voyages and allow similar benefit if the conditions of Article 8 were fulfilled. Vide the final order passed by the AO u/s 144C(13), the Assessing Officer noticed that the assessee failed to furn....
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....ubmitted that in the draft assessment order passed by the relevant AO in the case of CMA, a transfer pricing adjustment of Rs.3.00 crore was proposed. However, the DRP vide its direction dated 23.09.2011, in the case of CMA, held that the transfer pricing adjustment was not warranted. In the final assessment order passed u/s 144C(13) in respect of CMA, the Assessing Officer did not make any transfer pricing adjustment. It was submitted that since commission etc. to CMA was paid at arm's length price (ALP), there were no question of taxing further `business profits' in the hands of the assessee under Article 7. In support of this contention, he relied on the judgment of the Hon'ble jurisdictional High Court in Set Satellite(Singapore) Pte Lt....
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....nt context is from the shipping activity. The fact that such agent, representing PE, has been taxed distinctly in its individual capacity, inter alia, from the commission earned at arm's length price, does not mean that the business profits of the assessee attributable to the PE stand automatically erased. She explained her point of view with help of an example, in which a product with cost price at Rs.100, financial costs at Rs.10 and selling expenses at Rs.15 is eventually sold for Rs.150, thereby giving profit of Rs.25 to the seller. She argued that the fact that commission on sale has been paid at a sum of Rs.8, which forms part of the total selling expenses of Rs.15, as against the prevalent market rate of such commission at the same a....