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TMI Blog2019 (7) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... her examination with regard to admission of income on accrual basis in the contracting state. Hence, we deem it fit to remit the matter back to the file of the AO to re-examine the issue with regard to admission of income and filing the return in the contracting state and decide the same on merits. We direct the assessee to file necessary information or certificate confirming that the income relating to the voyage undertaken in India, in respect of the vessel, M. V. Arwad Queen was included in the return of income filed by the assessee or to obtain the certificate from the Inland Revenue Authority that in the assessee s case also, the shipping income is taxed on accrual basis on similar lines of ST Shipping Company referred to in the case law relied upon by the assessee. Appeal of the assessee is allowed for statistical purpose. - I.T.A. No. 213/VIZ/2018 - - - Dated:- 3-7-2019 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N.Hari, AR For The Respondent : Smt Suman Malik, DR ORDER Per Shri D. S. Sunder Singh, Accountant Member : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1097171 Add : Surcharge 0 Tax payable 1097171 Add : Education Cess 32915 Total Tax Payable 1130086 Less : Relief * 0 Balance Tax payable 1130086 Since there was no remittance proof furnished by the assessee, keeping in view of the provisions of Article 24 of Indo Singapore DTAA, the Assessing Officer (AO) raised the demand of ₹ 11,30,086/- on the representative assessee and completed the assessment by an order 172(4) dated 29. 12. 2015. 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and argued that in the assessee s case, Article 24 has no application and relied on the decision of ITAT Rajkot Bench in the case of Alabra Shipping Pte Ltd. (2016) 129 DTR (Rjt) (Trib) 43. The Ld. CIT(A) considered the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 24 of the DTAA. The contents of the letter dated 09. 01. 2013 of the authority may be reproduced. We refer to your letter dated 2 January 2013. 2. You have stated that ST Shipping and Transport Pte Ltd's principal business activity revolved around the shipping and it received charter payments for such services. During the calendar years 2011 and 2012, the company derived such charter income from the following parties in India: (1) related companies in the form of intercompany charges; and (2) third parties where the money was remitted to London or Switzerland bank accounts. 3. You have raised the concern that the benefits accorded under Article 8 of the Singapore-India DTA to the profits of your company were limited by the provisions of Article 24. 1 of the said DTA which state that any reliefs provided by the DTA would only apply to the amount of income-remitted into Singapore. As such, the Indian tax authorities were likely to impose a tax on your company's charter income. 4. Based on the information provided in your Letter, we would consider the charter incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause-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 Jaws 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 basis of receipt or remission and not by reference to the full amount of income accruing, clause1 of Article 24 would apply and dependent on the facts of the case, exemption as per Article 8 either in whole or in part would be excluded 18. To this later opinion of the Revenue authority of Singapore, we may not be fully guided since it falls within the realm of interpretation of the relevant clauses of DTAA. However, in absence of any rebuttal material produced by the Revenue, we would certainly be guided by the factual declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext, the petitioner has relied on the decision of Delhi High Court in case of Emirates Shipping Line, FZE (supra), in which it was held that the assesses, a UAE based shipping company, whose income from such business was exempt from tax in such country, would still not be liable to pay tax in India by virtue of Article 8 of the DTAA between the said two countries. It was held that a person does not have to actually pay taxes in other country to be entitled to benefit of DTAA. Therefore, argued that since the income of the assessee is taxable on accrual basis with the Singapore, there is no requirement of furnishing of any evidence, hence requested to set aside the order of the Ld. CIT(A) and delete the demand made by the AO. 5. Per contra, the Ld. DR argued that the assessee has not filed any details such as remittances made to CFD or taxability of income at Singapore on accrual basis. No certificate has been issued by the Singapore tax authorities. Therefore, argued that the case law relied upon by the assessee is not applicable in the case of the assessee. Hence, argued that no interference is called for in the order of the Ld. CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is taxable in Singapore on the basis of receipt or remission and not by reference to the full amount of income accruing, Clause-1 of Article 24 would apply and dependent on the facts of the case, exemption as per Article 8 either in whole or in part would be excluded. In para No. 17, the Hon ble High Court observed that as per certificate dated 09. 01. 2013 issued by the Inland Revenue Authority of Singapore, it was certified that the income in question derived by ST Shipping company would be considered as income accrued in or derived from the business carried on in Singapore and such income therefore would be assessable in Singapore on accrual basis. Hon ble High Court decided the issue on the basis of Inland Certificate issued by the Inland Revenue Authorities, Singapore and held that in the case of the assessee, in the cited case, Article 8 is applicable, but not Article 24. From the reading of the order of the Hon ble High Court, it shows that it is a case specific, but cannot be applied in general. In the instant case, though the representative assessee has filed the return of income u/s 172(3), he has not furnished any evidence to show that the assessee s income was taxed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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