TaxTMI 
TaxTMI 
2016 (9) TMI 19
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....g agency services. The petitioner provides such services to its members including to the said ST Shipping which is engaged in the business of operating ships in the international waters. ST Shipping is a taxed resident of Singapore. 4. During the period relevant to assessment year 2011-12, ST Shipping had through ships owned or chartered by it, undertaken voyages from various Indian ports and earned income from exporters and out of other such business. ST Shipping through present petitioner, filed a return of income under section 172(3) of the Act, declaring the gross profit calculations, but claiming Nil income by relying on Article 8 of Double Taxation Avoidance Agreement ('DTAA' for short) between India and Singapore. According to ST Shipping, such income was taxable only in Singapore and therefore, exempt from tax regime under the Indian Income Tax Act. 5. The Assessing Officer processed the returns for five separate vessels, through which, such freight movement had been undertaken and passed a consolidated order dated 26.12.2011, in which he held that the ST Shipping was not entitled to benefit of Article 8 of DTAA by virtue of the provisions contained in Article....
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.... withdrawn and instead a petition under section 264 of the Act was filed before the Commissioner. In such petition, it was contended that the freight income in question had been taxed under the laws of Singapore and was remitted to the bank account at Londan under the specific instructions of the beneficiary. 8. Before the Commissioner, during the proceedings under section 264 of the Act, the petitioner also produced a letter dated 09.01.2013 issued by Inland Revenue Authority of Singapore, in which, it was stated that the income in question derived by the ST Shipping would be considered to be income accruing in or derived from a business carried on in Singapore and the income would be therefore assessable to tax in Singapore on accrual basis. This was in response to the petitioner's letter to the said Revenue authority of Singapore concerning the applicability of Article 24 of the DTAA. The contents of the letter dated 09.01.2013 of the authority may be reproduced. " We refer to your letter dated 2 January 2013. 2. You have stated that ST Shipping and Transport Pte Ltd's principal business activity revolved around the shipping line and it received charter payments....
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....has also been examined by this office. The fact that the amount has not been remitted to Singapore has not been denied by the petitioner. Article 24 of the DTAA between India and Singapore does not talk about the issue of taxability of the amount not remitted to Singapore. Hence, the attempt of the Petitioner to prove the taxability of the amount in Singapore is of no consequence so far as interpretation of Article 24 of the Treaty is concerned. Once the factum of remittance not having been made to Singapore is established, the application of Article 24 is inescapable and hence, the Petitioner cannot be allowed benefit of the Treaty. No interference is called for in the order of the ITO(IT) on this issue as well. ... 5. It is further noted that the order for AY 201213 passed by the ITO(IT), Gandhidham in the assessee's own case has been made a subject matter of appeal before CIT(A), Gandhinagar. All the above three issued were raised before CIT(A) and the documents furnished before this office have also been furnished before CIT(A), Gandhinagar. The CIT(A) has discussed all the above evidences before arriving at a conclusion that the claim of the assessee on all these thr....
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....uipment for the transport of containers) in connection with such transportation; and (d) any other activity directly connected with such transportation. Article 24 LIMITATION OF RELIEF 1. Where this Agreement provides (with or without other conditions) that income from sources in a Contracting State shall be exempt from tax, or taxed at a reduced rate in that Contracting State and under the laws in force in the other Contracting State the said income is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this Agreement in the firstmentioned Contracting State shall apply to so much of the income as is remitted to or received in that other Contracting State. 2. However, this limitation does not apply to income derived by the Government of a Contracting State or any person approved by the competent authority of that State for the purpose of this paragraph. The term "Government" includes its agencies and statutory bodies. 11. In the background of such facts and the DTAA, learned counsel Shri Bandish ....
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....erived from Singapore, the same would be taxed only on the basis of actual receipt. IV. Even otherwise, there is no evidence to show that the assessee had offered such income to tax in Singapore and that the assessee was actually taxed on such income. If for any reason, the income was exempt from payment of tax, Indian Revenue authorities would be entitled to charge the tax on such income. 13. Having thus heard learned counsel for the parties and having perused documents on record, we may first dispose of the Revenue's objection to the maintainability of the revision petition. Section 264 of the Act pertains to revisional powers of the Commissioner. Under subsection (1) of section 264 in case of any order other than an order to which section 263 applies, which is passed by an authority subordinate to the Commissioner, he may either on his own motion or on application by assessee, call for the record of any proceedings in which, such an order has been passed and may make inquiry and subject to the provisions of the Act, pass such order thereon not being an order prejudicial to the assessee, as he thinks fit. Thus, under subsection (1) of section 264, the Commissioner has p....
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....apply and consequently Article 8 providing for avoidance of table taxation would not apply. 16. The fact, that the income in question which arises out of shipping operations by virtue of Clause1 of Article 8 of the DTAA would be taxable only in Singapore, is not in serious dispute. The moot question therefore is whether operation of Article 8 is ousted by virtue of Clause1 of Article 24. As noted, Article24 of DTAA pertains to limitation of relief. Under clause1 thereof where the agreement provides that the income from sources in contracting states (in the present case, India) shall be exempt from tax or tax at a reduced rate and under the laws in force in other contracting states (i.e. Singapore), such income is subject to tax by reference to the amount thereof which is remitted or received in that State and not by reference to the full amount thereof then the exemption or reduction of tax under the agreement would be limited to so much of the income as is remitted to or received in that contracting State. In plain terms therefore, if the income in question was taxable in Singapore on the basis of receipt or remission and not by reference to the full amount of income accruing, ....
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.... does not provide that in every case of nonremittance of income to the contracting state, Article 8 would not apply irrespective of tax treatment such income is given. When in the present case, we hold that the income in question was not taxable at Singapore on the basis of remittance but on the basis of accrual, the very basis for applying clause1 of Article 24 would not survive. The contention of Shri Mehta for revenue that the certificate of the Singapore revenue authorities is opposed to provisions of section 10 of the Singapore Income Tax Act also cannot be accepted. The Revenue does not question genuineness of the certificate. It cannot dispute the contention on the ground that the same are opposed to the statutory provision. 19. By way of a reference, we may notice that the Tribunal also in case of this very assessee in case of Alabra Shipping Pte Ltd. v. Income-tax Officer - International Taxation, Gandhidham, reported in 62 Taxmann.com 185 has taken a somewhat similar view by observing as under: "6. As a plain reading of Article 24(1) would show, this LOB clauses comes into play when (i) income sourced in a contracting state is exempt from tax in that source state or....