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TMI Blog2008 (11) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 9 of DTAA and had denied benefit only in respect of income pertaining to slot arrangements adopting a particular interpretation of the meaning of the phrase operation of ship . Therefore, we uphold the order of the CIT(A). In the result the appeal of the revenue is dismissed. - K.C. SINGHAL AND RAJENDRA SINGH, JJ. R.S. Srivastava for the Appellant. F.V. Irani for the Respondent. ORDER Rajendra Singh, Accountant Member. - This appeal by the revenue has directed against the order dated 20-12-2005 of CIT(A) for the assessment year 2002-03. 2. The only dispute raised by the revenue in this appeal is that on the facts and in the circumstances of the case CIT(A) was not justified in holding that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly did not allow the DTAA exemption in respect of the above amount. He computed the business income in respect of gross receipts pertaining to slot arrangement under section 44B which provided for taxation of shipping business income at the rate of 7.5 per cent of the gross receipt. Accordingly he taxed the business income at Rs. 44,81,330. 2.2 In appeal, the assessee submitted that for availing the benefit of article 9 of DTAA it was not necessary that the assessee should be engaged in the business of operation of ships only through ships owned by it or taken on lease. The assessee would be entitled to relief also in respect of operations carried out through ships owned by others. CIT(A) referred to the Commentary of Dr. Klaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly. The assessee is in the business of operation of ships in international traffic. In addition to receiving income from the operation of ships owned or chartered by the assessee, income has also been received from use of ship/vessels owned by others, on slot arrangement basis. The dispute is whether the assessee would be entitled to benefits of DTAA between India and France in respect of income received from use of ship on slot arrangement basis. The relevant article 9 of DTAA between India and France which deals with taxation of income from operation of ships is reproduced below as a ready reference : "Article 9 of the Indo-France DTAA. 1.Profits derived by an enterprise of a Contracting State from the operation of ships in internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined either in the Indo French Treaty or in the Indo-UK Treaty. The Tribunal in case of M/s. Balaji Shipping (UK) Ltd. ( supra ) which was concerned with Indo-UK Treaty had applied the OECD MC in the absence of any definition of phrase operation of ships either in the DTAA or in the domestic law of either of the Contracting States. After necessary examination, the Tribunal held that as per article 8 of OECD, MC which was similar to the article 9 of Indo-UK Treaty, the income earned by the assessee on account of transportation by ships operated by other enterprises, under slot chartering arrangement would also be taxable only in the State of residence and accordingly, such income will be exempt from the income-tax under the Indian In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of passengers/cargo otherwise than by ships that it operates in the international traffic to the extent such transportation is directly covered with the operation of ships in the international traffic by that enterprise. This covers a situation where the assessee is unable to transport the passengers/cargo from its own ship but transports the same through ships operated in international traffic operated by the other enterprises. This has been explained by giving an example also. According to this example, some of the passengers/cargo may be transported internationally by ships operated by other enterprises under slot chartering arrangement. In our view, this paragraph would cover the facts of the present case since the assessee not on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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