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2023 (8) TMI 285 - AT - Income TaxTax on the income received from the international voyage of vessel - contention of Ld. A.R. that the benefit under Article 8 as well as Article 7 of India Singapore Treaty (DTAA) is applicable in the present case - HELD THAT - The said treaty is applicable in the present case as the assessee has already paid taxes for the said voyage for the period 28.09.2016 to 27.10.2016 while it is on international traffic / foreign run which includes the voyage from one Indian Port to another Indian Port. The stand of the Revenue that the assessee has not paid the taxes in Singapore appears to be incorrect and in fact it was not just a costal run but a part of an international voyage and therefore, Article 8 and Article 23 of India-Singapore DTAA is applicable in the present case. The decision in case of Taurus Shipping Services 2015 (12) TMI 401 - GUJARAT HIGH COURT is squarely applicable in the present case wherein it is held that the benefit of India Singapore Tax Treaty is applicable in assessee beneficiary s case and is covered under Article 8 of India Singapore Tax Treaty and profit attributable to M/s. Jaldhi Overseas Pte. Ltd. is taxable only in Singapore and not in India. In fact, in the present assessee s beneficiaries case the assessee has paid the taxes with the Singapore Revenue Authorities and it is on a better footing than in case of Taurus Shipping Services. Thus, the appeal filed by the assessee is allowed.
Issues Involved:
1. Jurisdiction and natural justice. 2. Agent liability and tax demand. 3. DTAA benefits between India and Singapore for freight earned. 4. Classification of vessel operation as coastal or international. 5. Tax liability calculation. 6. Penalty proceedings under Section 271(1)(c). 7. Assessment and taxation under Section 172(4). 8. Entitlement to Article 8 of DTA between India and Singapore. 9. Taxation of income under Article 24 of the India-Singapore treaty. Summary: Jurisdiction and Natural Justice: The assessee contended that the order passed by the Assessing Officer (AO) was beyond jurisdiction, against the rule of natural justice, and based on an inappropriate appraisal of facts and law, including the Double Tax Avoidance Agreement (DTAA) between India and Singapore. The CIT(A) upheld the AO's order without appropriately considering the submissions and case laws cited by the assessee. Agent Liability and Tax Demand: The AO concluded that the appellant was an agent of the vessel M.V. New Caledonia Maru and liable to be assessed and pay the demanded tax. This conclusion was upheld by the CIT(A) despite the appellant's contention that it was incorrect. DTAA Benefits: The AO determined that the appellant and the freight beneficiary were not entitled to DTAA benefits for the freight earned by the vessel's journey on 01.10.2016. The CIT(A) upheld this conclusion, which the appellant argued was factually incorrect. Classification of Vessel Operation: The AO concluded that the vessel operated solely between two Indian ports and was not part of international traffic. The CIT(A) upheld this conclusion, which the appellant argued was based on an inappropriate appraisal of facts. Tax Liability Calculation: The AO calculated the tax liability at Rs. 4,50,470 on a taxable income of Rs. 10,66,701, being 7.5% of the total freight earned in Indian Rupees of Rs. 1,42,22,687. The appellant contended that this calculation was incorrect. Penalty Proceedings: The AO initiated penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars and concealing income. The CIT(A) upheld this decision, which the appellant contested. Assessment and Taxation under Section 172(4): The AO assessed and taxed the appellant under Section 172(4) of the Income Tax Act, which the appellant challenged. The CIT(A) upheld the AO's determination. Entitlement to Article 8 of DTA: The CIT(A) held that the appellant, as a charter who hired the ship, was not entitled to the benefit of Article 8 of the DTAA between India and Singapore, ignoring judicial precedents cited by the appellant. Taxation under Article 24: The CIT(A) held that the income from the ship's trip had not suffered tax in Singapore, and therefore, the appellant was not entitled to treaty benefits under Article 24 of the India-Singapore DTAA. Tribunal's Decision: The Tribunal noted that the appellant had provided sufficient documentation, including charter party agreements, tax residency certificates, and evidence of tax payments to Singapore authorities. The Tribunal found that the vessel's journey was part of an international voyage, not merely a coastal run, and thus, the DTAA benefits under Articles 8 and 24 were applicable. The Tribunal concluded that the appellant had paid taxes in Singapore, making the AO's and CIT(A)'s conclusions incorrect. Consequently, the appeal filed by the assessee was allowed. Result: The appeal of the assessee was allowed, and the order was pronounced in open court on 02/08/2023.
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