TaxTMI 
TaxTMI 
2017 (10) TMI 1253
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....ax Treaty. Ground No.4 is extension of Ground No.2. It is about denying the benefit of Article 8 of the Treaty with respect to freight of Rs. 19.91 crores. Assessee-company is a tax resident of Singapore and is engaged in the business of operation of ships in International traffic. It filed its return of income on 10/09/2010 declaring its income of Rs.Nil. In its return of income. it was claimed that gross freight earning, including detention collection of Rs. 968.22 crores was not taxable as per Article 8(1) of the Double Taxation Avoidance Agreement (DTAA), that the profit derived from operation of ships in international traffic by an enterprise of Singapore were taxable only in Sinagapore, that as per Article -8 of the DTAA income arising from shipping(either from ship owned or from joint business or from participation in a pool) was taxable in the State of which the assessee enterprise was resident. During the course of assessment, proceedings the AO directed the assessee to file copies of ship registration certificate/copies of chartered party agreements and pooling arrangements along with the proof so as to prove that the income shown and claimed exempt in respect of such v....
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....ents relief under Article 8 of the tax Treaty was available for those ships also. He referred to cases of(ITA/4435/Mum/20l 3 dtd. 16/2/2017) and AP Moller (76 taxmann. com 143) of the Hon'ble Bombay High Court. Alternatively it was argued that the Transfer Pricing Officer(TPO)had accepted that international transactions, entered into by the assessee, with its Associate Enterprise(AE)were at Arm's Length, that if the transactions were at ALP no further attribution was possible. He referred to case of ANL Singapore Pte Ltd.( 145 1TD 93). The Departmental Representative(DR)supported the order of DRP and contended that the assessee had not filed necessary details about the 15 ships before the AO or DRP that in earlier year the Tribunal had upheld the order of the revenue authorities for the income of the ships for which documents were not submitted. In his rejoinder the AR stated that the DRP had relied upon the case of Delmas. that Delmas was contrary to order of Balaji Shipping ,that in the assessee 's own case it was held that even if entire journey was through other vessels the assessee was entitled to claim benefit of Article-8 of the DTAA. He referred to case of Bala....
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....from operation of shipping business was to be taxed in Singapore provided that it had arisen out of international traffic. 3.3.2 Principles, governing the taxation of shipping business under the DTAA.s, lay down certain guideline to decide issues. But, the principles have to applied to the peculiar facts of a case, as they are the foundation stone of any judgment. In other words, whether a particular judgment or case will be applicable or not depends upon the facts of that case. In the case under appeal, a principle has been laid down, by judicial forums, as stated earlier, that if a ship or an aircraft in engaged in the business of operating in international traffic its income would be taxable in the place of its HQ. But, the facts of operation of ships in international traffic has to be established by the assessee. Pre-condition, for claiming exemption from Indian tax law is to establish the fact that the income earned/accrued to an assessee had arisen from operation of ships in international traffic. The onus was on the assessee to prove the fact. Under Section 106 of the Evidence Act when any fact is especially within the knowledge of any person, the burden of proving the fact....
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....ncome as exempt. The Assessing Officer called for details of shipping income and also copies of ship Registration Certificate, copies of Charter Party agreements and Pooling agreements, etc. The Assessing Officer noted that the assessee Could produce ship Registration Certificates and copies of Charter Party agreements and other evidences in respect of 128 ships and for the balance 8 ships Assesses could not produce any evidences. Accordingly, he held that the freight proceeds from following ships will not be entitled for benefit under Article. 8, details of which have been given at para 4 of the assessment order and which for the sake of ready reference is reproduced hereunder:- xxxxx 3. The Assessing Officer further held that assessee could not establish that it is operating these 8 ships on its own and it is quite possible that these ships might be operated by third parties. Accordingly, he applied the provisions of Sec. 44B of the Act and taxed the said receipt (a) 7.5%. The Assessing Officer further observed that assessee had an exclusive agent in the form of "A PL India Pvt. Ltd. ", who performed all the work relating to assessee in all the Indian ports where the. assess....
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....roposed to levy interest u/s.234B.The assessee agitated the issue before the DRP. However/it held that same was not be adjudicate by the DRP, as it was related to 'variance in income'. 4.1 Before us, the AR stated that the AC) was not authorised to levy interest u/s.234B of the Act. as per the provisions of DTAA. The DR left the issue to the discretion of the Bench. We have heard the rival submissions. In our opinion, the DRP should have decided the issue raised by the assessee by a speaking order. But, that does not mean that we cannot decide it. It is a legal issue and has remained unadjudicated. It was brought to our notice that the Department had issued Double income Tax Relief Certificate to the assessee. Clearly the assessee was not liable to pay advance tax. Besides for freight income earned by it was liable for deduction of tax at source as per the provisions of section 209(1)(d) of the Act. Considering the above, we decide ground no.7 in favour of the assessee. ITA/1928/Mum/20I4: 5. The solitary effective ground of appeal, raised by the AC) is about Inland Haulage Charges (IHC),amounting to Rs. 20 lakhs. During the assessment proceedings, the AG found that. 5....
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....g of the Explanation reveals that the demurrage charges or handling charges or any other amount of similar nature have been brought within the ambit of "business income" for applying the rate of 7-1/2 per cent. The very nature of items prescribed in the Explanation being demurrage charges or handling charges, which precede "any other amount of similar nature", shows that the latter category has to draw a colour from the items referred to in the earlier part. The expression "any other amount of similar nature'' cannot read in isolation by disregarding the nature of items preceding it. The meaning of the Succeeding expression has to be understood in the context of the preceding words. The doctrine of noscitur a sociis mandates that a general word in the company of specific yards has to be read in the context of the specific words with which it is associated. In such a situation, the general words assume the character of the nature of items described in the specific words accompanying them. This doctrine has been repeatedly affirmed by the Hon'ble apex Court in several cases including Stonecraft Enterprises v. CIT [1999] 153 CTR (SC) 86 : (1999) 237 ITR 131 (SC). 8. Comi....