9911796707
TMI Blog2017 (4) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... HRI PAWAN SINGH, JUDICIAL MEMBER Assessee by : Shri P.J. Pardiwala -Advocate Revenue by : Shri Jasbir Chouhan (CIT-DR) ORDER Per Pawan Singh, Judicial Member 1. This appeal by assessee under section 253 of the Income-tax Act ( the Act ) is directed against the order passed under section 143(3) r.w.s. 144C (13) in pursuance of direction of Dispute Resolution Penal (DRP), for Assessment Year (AY) 2010-11. The assessee has raised the following grounds of appeal: (i) The ld. Assessing Officer has erred in law and on facts in denying to the Appellant, the benefit of Article 13(4) of the Double Taxation Avoidance Agreement (DTAA) between India and Singapore. (ii) The ld. ld. Assessing Officer ought to have held that Article 24 of the DTAA between India and Singapore has no application to the Appellant. 2. Brief facts of the case are that the assessee is tax resident of Singapore and registered as Foreign Institutional Investor (FII) in Debt segment, with Security and Exchange Board of India (SEBI). The assessee filed return of income on 30.09.2009 declaring total income of ₹ 33,99,75,350/-. In the return the assessee declared a Capital Gain of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP). The DRP sustained the action of AO vide its order dated 14.11.2014 passed u/s 144C (5). Thus, in pursuance of direction of DRP, the AO completed the assessment order on 30.12.2014 u/s 143(3) r.w.s. 144C(13) of the Act. Further aggrieved by the order passed in pursuance of direction of DRP u/s 143(3) r.w.s. 144C(13), the assessee has filed the present appeal before the Tribunal. 4. We have heard Shri P. J. Pardiwala ld. Sr Advocate (ld Counsel) and Shri Jasbir Chouhan, ld. Sr Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. Counsel for assessee referred before us the contents Article 13 and the relevant phrase used in Article 24 of India- Singapore DTAA and submitted that the provisions of Article 24 are not attracted to the income which is covered by Article 13(4) of Treaty. The said provision will only apply to the income which is either exempt from tax in India or tax as reduced rate in India. The income earned by assessee being FII is liable to tax in Singapore on its worldwide income. The Singapore tax authority has given a certificate certifying that assessee is buying and selling Indian Debt Securities from For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed rate III that- Contracting State and under the laws in force in the other Contracting State, the said income is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this Agreement in the first-mentioned Contracting State shall apply to so much of the income as is remitted to or received in that other Contracting State. 2. However, this limitation does not apply to income derived by the Government of a Contracting State or any person approached by the competent authority of that -State for the purpose of this paragraph. The term Government includes its agencies and statutory bodies. We may also refer the certificate issued by Singapore Tax Authority certifying that selling of India debt securities from foreign exchange transaction in India, the income accrued or derived by assessee is taxable in Singapore. The contents of the certificate issued by Singapore Tax Authorities are reproduced below; Dear Sir/Madam CITICORP INVESTMENT BANK (SINGAPORE) LIMITED ( CIBSL ) TAX REFERENCE NO. 197200204M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he alienation of any property other than those mentioned in paragraph 1 2 of this Article (13) shall be taxable in that State (Singapore). Article 24 of the Treaty provides the limitation of benefit provision used by such country which imposes on a tax of certain payer on remittance basis. The limitation provided under this Article operates in conjunction with the provisions of Treaty which are related with reduced rate of tax or exempted not taxed in the country of source. The Co-ordinate Bench of Mumbai Tribunal in SET Satellite (Singapore) Pte Ltd. vs. ADIT (supra) while discussing the scope of limitation of Article 24 of the Treaty held as under: 2. After considering the argument of both the sides and perusing the material on record, we find that an error apparent on record has crept into the order of the Tribunal dated 25th June, 2010. We, therefore, rectify the same by deleting para 21 of the said order and substituting the same with the following: 21. Article 24 of the India-Singapore Treaty reads as follows: Limitation of Relief 1. Where this Agreement provides (with or without other conditions) that income from sources in a Contracting state shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons cases where an income is exempt from tax in a Contracting state. There is a distinction between income 'exempt from tax' and income which is 'not taxable'; in the instant case there is no question of income being exempt from tax in India and therefore Article 24 should not apply on this count as well. Finally, based on the documents filed, it is clear that the amount paid by SET Satellite (Singapore) Pte Ltd to GCC, in Jersey, was subject to tax in Singapore under its domestic laws and hence Article 24 cannot apply on this count too. We therefore believe that the provisions of Article 24 of the DTAA do not apply to the facts of this case and the assessee is entitled to the benefits under the India- Singapore Treaty. Further, the Co-ordinate Bench of Mumbai Tribunal in APL Company Pte Ltd. vs. ADIT (supra), again considered the scope of limitation prescribed under Article 24 of Treaty. Wherein, almost similar certificate related with freight income as provided under Article 8 of Treaty, issued by Singapore Revenue Authority (as given in the present case related with buying and selling of debt security) was also relied by assessee (in that case) and the bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S for the year ending on 31.12.2008, relevant for Assessment Year 2008- 09, copy of which is appearing from pages 23 to 30 of the paper book. In the said return, the column mentioning the foreign income received in Singapore has been reported to be NIL‟, whereas income accruing in or derived from Singapore has been shown at SGD 2,207,928. A confirmation/Certificate has also been obtained from IRAS, the content of which is reproduced hereunder:- Dear Sir/Madam APL Co. Pte Ltd. ( the company ) FREIGHT INCOME YEARS OF ASSESSMENT ( YAs ) 2008 2009 1. We refer to our discussions on the subject. 2. You have stated that the company is primarily engaged in shipping and related businesses and it receives freight payments for its services. During calendar years 2007 and 2008, the company derived freight income from third parties including freight income from Indian operations, that is, income from the carriage of goods/cargo to and from Indian ports. The company has reported the freight income in its Singapore tax returns for the YAs 2008 and 2009. 3. You wish to seek our clarification to the effect that Article 24(1) of the India-Singapore double taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of such accrued income not having taken place at Singapore, Article 24 will apply and consequently Article 8 providing for avoidance of table taxation would not apply. 16. The fact, that the income in question which arises out of shipping operations by virtue of Clause-1 of Article 8 of the DTAA would be taxable only in Singapore, is not in serious dispute. The moot question therefore is whether operation of Article 8 is ousted by virtue of Clause-1 of Article 24. As noted, Article-24 of DTAA pertains to limitation of relief. Under clause-1 thereof where the agreement provides that the income from sources in contracting states (in the present case, India) shall be exempt from tax or tax at a reduced rate and under the laws in force in other contracting states (i.e. Singapore), such income is subject to tax by reference to the amount thereof which is remitted or received in that State and not by reference to the full amount thereof then the exemption or reduction of tax under the agreement would be limited to so much of the income as is remitted to or received in that contracting State. In plain terms therefore, if the income in question was taxable in Singapore on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of Article 8 would be ousted to the extent such income is not remitted. This clause does not provide that in every case of non- remittance of income to the contracting state, Article 8 would not apply irrespective of tax treatment such income is given. When in the present case, we hold that the income in question was not taxable at Singapore on the basis of remittance but on the basis of accrual; the very basis for applying clause-1 of Article 24 would not survive. The contention of Shri Mehta for revenue that the certificate of the Singapore revenue authorities is opposed to provisions of section 10 of the Singapore Income Tax Act also cannot be accepted. The Revenue does not question genuineness of the certificate. It cannot dispute the contention on the ground that the same are opposed to the statutory provision. 19. By way of a reference, we may notice that the Tribunal also in case of this very assessee in case of Alabra Shipping Pte Ltd. v. Income-tax Officer - International Taxation, Gandhidham, reported in 62 Taxmann.com 185 has taken a somewhat similar view by observing as under: 6. As a plain reading of Article 24(1) would show, this LOB clauses comes in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income- Tax (International Taxation) v. Venkatesh Karrier Ltd. reported in 349 ITR 124,-inwhich the Court observed as under: 10. After taking into consideration the above circulars issued by the Board and also the provisions contained in Article 8 of the DTAA, we find that both the Tribunal below and the CIT [Appeals] rightly held that in such a situation, the owner of the ship being admittedly a resident of UAE, there was no scope of taxing the income of the ship in any of the ports in India. The agreement between the two countries has ousted the jurisdiction of the taxing officers in India to tax the profits derived by the enterprise once it is found that the ship belongs to a resident of the other contracting country and such position has also been clarified by the Circulars issued by the Board as indicated above. 22. In the present case, however, we are not inclined to conclude this issue since this was not even a ground on which either the Assessing Officer or the Commissioner has refused to grant the benefit to the petitioner. It is not a ground sought to be raised for the first time before us by the Revenue, for which, full factual evidence, nor legal foundat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the source state. It only envisages territorial and jurisdictional rights for taxing the income and India has no jurisdiction for any taxing right which are governed by Article 8. There is no stipulation about exemption under Article 8 of the shipping income which as pointed out by ld. Senior Counsel has been specifically provided in some of the Articles like Article 20, 21 22. Hence, it cannot be reckoned that shipping income earned from India is to be treated as exempt from tax or taxed at reduced rate, which is a condition precedent for applicability of Article 24, albeit India at the threshold does not have the jurisdiction to tax the shipping income of the non-resident entity. Thus, the condition of Article 24 is not satisfied in the present case from this angle also. In conclusion, we hold that the ld. CIT (A) was not justified in denying the benefit of Article 8 by invoking the limitation clause of Article 24 of India- Singapore DTAA as per our discussion above and most important, now this issue stands squarely covered by the decision of Hon'ble Gujarat High Court as referred above. In the light of our aforesaid finding, we do not deem fit to enter into the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
