TaxTMI 
TaxTMI 
2017 (10) TMI 105
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....ident of Singapore and in view of the DTAA between India and Singapore, the entire freight earned by the freight beneficiary is exempt from tax in India. At the time of obtaining NOC, the local agent furnished a copy of the Tax Residency Certificate (TRC) in respect of freight beneficiary in evidence of the fact that it is a resident of Singapore. The local agent had also filed a certificate from the freight beneficiary to enable the local agent on their behalf to execute the guarantee bond. After verification of the information filed, an order u/s 163, dated 10.03.2014 was passed treating the local agent as the representative of the assessee. Subsequently, a return u/s 172(3) was filed by the local agent on 26.03.2014. In view of the Article 24 of the Double Taxation Avoidance Agreement (DTAA) between India & Singapore, the AO called for details of net freight paid to the freight beneficiary and the amount credited to the Bank A/c of the freight beneficiary of Singapore. The local agent did not file any of the information called for and therefore, a further reminder was issued. The representative of the assessee filed the necessary information. On verification of the details filed....
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....Mikage & 4 Petitioner(s) vs. DIT (IT) in Special Civil Application No.9150 of 2014 dated 24.08.2016 in support of his contentions. 6. The learned DR, on the other hand, supported the orders of the authorities below and submitted that though the assessee has filed evidence for remittance of USD 7,05,421 to the assessee in Singapore, it has not filed any evidence of offering the same to tax in Singapore and therefore, the same is not exempt from tax in India as per Article 24 r.w. Article 8 of the DTAA between India & Singapore. Therefore, the learned DR prayed that the order of the CIT (A) be confirmed. 7. Having regard to the rival contentions and the material on record, we find that the AO has held a part of the receipt which has been received by the assessee in Singapore as exempt from tax in India and the balance has been brought to tax on the ground that the assessee has not furnished the proof of its remittance to the assessee in Singapore. During the appellate proceedings, the assessee has furnished the information and the AO in his remand report has accepted the remittance of a total of USD 7,05,421. It has never been the case of the AO or the CIT (A) that the assessee....
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....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, clause-1 of Article 24 would apply and dependent on the facts of the case, exemption as per Article 8 either in whole or in part would be excluded. 17. It is, in this context, that the certificate dated 09.01.2013 issued by the Inland Revenue Authority of Singapore assumes significance. In the said certificate, as noted, it was certified that the income in question derived by ST Shipping would be considered as income accruing in or derived from the business carried on in Singapore and such income therefore, would be assessable in Singapore on accrual basis. It was elaborated that the full amount of income would be assessable to tax in Singapore not by refer....
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....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 is subject to tax at a reduced rate in that source state, (ii) the said income (i.e. income sourced in the contracting state) is subject to tax by reference to the amount remitted to, or received in, the other contracting state, rather than with reference to full amount of such income; and (iii) in such a situation, the treaty protection will be restricted to the amount which is taxed in that other contracting state. In simple words, the benefit of treaty protection is restricted to the amount of income which is eventually subject matter of taxation ....