9911796707
TMI Blog2015 (10) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to tax on an accrual basis (and not remittance basis) in the year of assessment”. The assessee has also filed a confirmation dated 4th December 2013 from its public accountant that the freight of US $ 6,71,366 earned on MT Albara’s sailing from Sikka port has been included in the global income offered to tax by the company in Singapore. On these facts, in our considered view, the provisions of Article 24 cannot be put into service as this provision can only be triggered when twin conditions of treaty protection, by low or no taxability, in the source jurisdiction and taxability on receipt basis, in the residence jurisdiction, are fulfilled. The only reason for declining Indo Singapore tax treaty benefits was the application of Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n short) and the ASPL-S is freight beneficiary in respect of the same, as an agent of ASPL-S and under section 172(3) of the Act. In the course of scrutinizing this return, the Assessing Officer noticed that while the assessee has claimed the benefit of India Singapore Double Taxation Avoidance Agreement [(1994) 209 ITR (St) 1; hereinafter referred to as Indo Singapore tax treaty ], the funds were remitted to freight beneficiary s account with The Bank of Nova Scotia in London UK. It was in this background, and noting that the freight has been remitted to a country other than Singapore and that remittance to Singapore is a sine qua non for availing the benefits of the Indo-Singapore tax treaty, that the Assessing Officer proceeded to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of Article 8 cannot be availed by the appellant and that accordingly, the actions of the AO are confirmed . 3. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 4. The short issue that we are really required to adjudicate on in this case is whether or not, in view of the limitation of benefits provisions set out in the Indo Singapore treaty, the assessee can indeed be declined the benefits of India Singapore tax treaty. 5. As the assessee seeks benefit of treaty protection, in terms of its shipping income covered by Article 8, the only limitation on benefit provision which comes into play in this case is the provision se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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 in the source country. This is all the more relevant for the reason that in a situation in which territorial method of taxation is followed by a tax jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of treaty protection, by low or no taxability, in the source jurisdiction and taxability on receipt basis, in the residence jurisdiction, are fulfilled. There is nothing on the record to even vaguely suggest that the freight receipts of ASPL-S were taxation only on receipt basis in Singapore. Quite to the contrary, there is reasonable evidence to demonstrate that such an income was taxable, on accrual basis, in the hands of the assessee. All this material was duly confronted to the Assessing Officer, in the remand proceedings, and the Assessing Officer could not demonstrate that the stand taken by the ASPL-S in this regard was incorrect. 8. As regards reliance of the authorities below on the decision of this Tribunal, in the case of Abac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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