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TMI Blog2023 (6) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... e draft assessment order has disallowed the benefit of Article 13(4) of DTAA on capital gain earned in India holding that provisions of Article 24 of DTAA speaks about the restriction of exemption of such capital gain to the extent of repatriation of such income to Singapore. AO has held that the assessee has not produced any evidence to show such required repatriation as mandated by Article 24 of DTAA for entitlement of exempted income. This is an incorrect statement as rightly held by the ITAT. The assessee placed on record even before the AO a certificate dated 16th April 2012 from Singapore Tax Authorities certifying that the income derived by the assessee from buying and selling of Indian Debt Securities and from Foreign Exchange transactions in India would be considered under Singapore Taxes Law as accruing in or derived from Singapore and such income would be brought to tax in Singapore without reference to the amount remitted or received in Singapore. Singapore authorities have themselves certified that the capital gain income would be brought to tax in Singapore without reference to the amount remitted or received in Singapore. The AO could not have come to a conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to get any benefit under the DTAA, the assessee has to fall within the provisions of DTAA. According to AO, though the provisions of Article 13(4) allows exemption of capital gains in source country, i.e., India, provisions of Article 24 of DTAA provides for restriction of exemption of such capital gains to the extent of repatriation of such income to other country, i.e., Singapore. According to AO, even Singapore law under Section 10(1) relating to charge of income tax under the Singapore Income Tax Act, reveals that it taxes income on receipt basis of such income in Singapore from outside Singapore. In other words, AO rejected the certificate issued by the tax authority in Singapore and proceeded by interpreting the laws of Singapore on his own. AO held that the assessee did not show that repatriation of the capital gains was made to Singapore and in view of Article 24 of DTAA, the assessee is not entitled to the exemption claimed. 3. Aggrieved by this treatment of capital gain as taxable in India in the draft assessment order, the assessee filed objections before the Dispute Resolution Panel (DRP). DRP by an order dated 14th November 2014 passed under Section 114C(5) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence for accepting the position of the law in Singapore and the AO should not try to interpret the laws of Singapore and in this regard a certificate, admittedly, is issued. The revenue cannot dispute the fact that the entire amount of capital gain whether remitted or not remitted, is taxed in Singapore on the face of the certificate issued by the tax authorities. 8. In our view, the appeal does not raise any substantial question of law and we find no infirmity in the order passed by the ITAT. 9. Article 13 of DTAA as then applicable reads as under: ARTICLE 13 1. Gains derived by a resident of a Contracting State from the alienation of immovable property, referred to in Article 6, and situated in the other Contracting State may be taxed in that other State. 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax to be allowed under this agreement in India shall apply to so much of the income as is remitted to or received in Singapore. Clause 2 of Article 24 is not relevant to the case at hand. 11. Therefore, the exemption or reduction of tax to be allowed under the DTAA in India shall only apply to so much of the income as is remitted to or received in Singapore where the laws in force in Singapore provides that the said income is subject to tax by reference to the amount which is remitted or received in Singapore. When under the laws in force in Singapore the income is subject to tax by reference to the full amount thereof, whether or not remitted to or received in Singapore, then in that case Article 24(1) would not apply. 12. The AO while framing the draft assessment order has disallowed the benefit of Article 13(4) of DTAA on capital gain earned in India holding that provisions of Article 24 of DTAA speaks about the restriction of exemption of such capital gain to the extent of repatriation of such income to Singapore. The AO has held that the assessee has not produced any evidence to show such required repatriation as mandated by Article 24 of DTAA for entitlement of exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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