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No change in article relating to income-tax in agreement between Government of Polish People's Republic. - Income Tax - 1253/CBDTExtract INSTRUCTION NO. 1253/CBDT Dated : April 24, 1979 Attention is invited to Board's letter F.No. 25/16/56-IT, dated 3.8.56 with which a copy of Article 9 of the 1956 Agreement between the Government of Polish People's Republic regarding shipping cooperation between India and Poland was enclosed. The 1956 Agreement was revised in 1960 but no change was effected in the article relating to income-tax. The relevant article is as under :- " No income-tax shall be levied or collected by the Government of the Republic of India on the freight earnings of polish ships of this service at the Indian ports and likewise income-tax shall not be levied or collected by the Government of the Polish People's Republic on the freight earnings of Indian ships of this service at the Polish ports. This provision will also cover ships time-chartered by either party for the service". This article provides for exemption from income-tax by both Poland and India in respect of the ships of "this service". The importance of the words "this service" has been examined in consultation with the Ministry of Shipping Transport and the Ministry of External Affairs. It has been decided that because of these words, the benefit of the above Article would be available in respect of freight earnings arising from the cargos carried between the ports of the two countries other than Poland, income arising from such freight earnings should be subjected to tax. In other words, tax would be charged only in respect of such income arising from the carriage of goods for third countries. 2. It has also been decided that action may be taken in respect of such earnings with effect from 1.4.1979 and that no action should be taken for the present to reopen past assessments to assess the Polish ships in respect of the earning arising from the lifting of the cargoes for third countries. Instructions in this regard would be issued later on, if considered necessary.
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