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TMI Blog2023 (8) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... case wherein it is held that the benefit of India Singapore Tax Treaty is applicable in assessee beneficiary s case and is covered under Article 8 of India Singapore Tax Treaty and profit attributable to M/s. Jaldhi Overseas Pte. Ltd. is taxable only in Singapore and not in India. In fact, in the present assessee s beneficiaries case the assessee has paid the taxes with the Singapore Revenue Authorities and it is on a better footing than in case of Taurus Shipping Services. Thus, the appeal filed by the assessee is allowed. - Ms. Suchitra Kamble, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Appellant : Shri Anil N. Shah, A.R For the Respondent : Shri B.D. Gupta, Sr. D.R. ORDER PER SUCHITRA KAMBLE - JM: This appeal is filed by the assessee against the order dated 31.07.2018 passed by the Ld. CIT(Appeals)-13, Ahmedabad for A.Y. 2017-18. 2. The grounds of appeal raised by the assessee read as under: 1. The order passed is beyond jurisdiction of Ld. A.O., is passed against the rule of natural justice and is based on an inappropriate appraisal of facts, DTAA between India and Singapore as well as by ignoring and misinterpretin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) have erred in law and on facts in upholding the said order based on inappropriate appraisal of facts, law and case law by making unwanted, unwarranted and irrelevant observations in the order passed by her. 6. The Ld. AO have erred in law and on facts in coming to the conclusion that, the appellant furnished inaccurate particulars and concealed income and thereby erred in initiating penalty proceedings u/s. 271(1)(c) of the Act and even the Ld. CIT(A) have erred in law and on facts in upholding the said order based on inappropriate appraisal of facts, law and case law by making unwanted, unwarranted and irrelevant observations in the order passed by her. 7. Without considering the facts of the case and the law proper, the Ld. AO have erred in law and facts in holding that, the appellant is liable to be assessed and taxed u/s. 172(4) of the Act and thereby have also erred in determining the tax under the said section 172(4) of the Act to which i.e. the determining the tax and passing the order u/s. 172(4) of the Act, assessee appellant do not agree and challenges the same under the appeal and even the Ld. CIT(A) have erred in law and on facts in upholding the said or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagement of the company and details of coastal run, a letter dated 12.07.2017 was issued to the assessee by the Assessing Officer thereby calling upon various documents. The assessee through its agent filed submissions dated 21.07.2017. On perusal of the same, the Assessing Officer observed that the freight beneficiary assessee company has furnished all documents in support of effective management, therefore no adverse view was taken on this issue. On verification of the clearance certificate issued by custom authority of JSW Jetty Dharamtar Port, Raigad, the Assessing Officer observed that the vessel has not run into international traffic. The Assessing Officer noted that exemption is not available for the reason that the vessel made a coastal run. The Assessing Officer further noted that Article 8 in the Double Tax Avoidance Agreement (DTAA) between India and Singapore states that the benefit of taxation in the resident shall be available to an enterprise for profits derived from the operation of ships in international traffic. The vessel performed a journey within two ports of India in pursuance of a charter party agreement. Since the load port and discharge ports were in pursua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion arrived by the Assessing Officer that the vessel was operated solely between two ports in Indian and was not part of international traffic / journey from port Kembla, Australia and it again reverted it s journey to foreign run after it s arrival to Okha Port in India and performing a journey between two ports in India being larger voyage / run in international water / traffic and against upholding the same by the CIT(A) based on inappropriate appraisal of facts. The Ld. A.R. in respect of Ground No. 5 submitted that the Assessing Officer was not correct in stating that the assessee was liable to pay tax of Rs. 4,50,470/- on taxable income worked out at Rs. 10,66,701/- being 7.5% of total amount of freight earned in Indian Rupees of Rs. 1,42,22,687/-. The Ld. A.R. submitted that in the case of CIT vs. Taurus Shipping Services (Tax Appeal No. 847 to 849 of 2015 order dated 01.12.2015) passed by the Hon ble Gujarat High Court, similar issue related to the similar facts of the assessee s case was taken into consideration. The Ld. A.R. submitted that the Hon ble Gujarat High Court also observed that the goods were loaded on the vessel M. V. Nord Leader which sailed on 24.06.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Ports cannot be termed as costal run as has been done by the Assessing Officer in light of the decision of Hon ble Gujarat High Court. The Ld. A.R. further submitted that the said Jaldhi Overseas Pte. Ltd. has issued a certificate specifically confirming the fact that they have considered the income of Rs. 1,42,22,687/- which is the impugned income under the present appeal on accrual basis earned on New Caledonia Maru during its voyage from 28.09.2016 to 27.10.2016 while it is on international traffic / foreign run and passed through Indian Water and accordingly is taxable income in Singapore and the assessee has paid taxes on the same. In fact, the income to offer tax was Singapore $ 2,357,000 as per the earlier notice. Thus, the CIT(A) was wrong in misinterpreting the notice. The tax have been paid in Singapore. Thus, the freight income assessed by the impugned order and the action of the CIT(A) is incorrect. The income of the trip of the ship Chartered by the assessee as offered tax in Singapore and therefore, the assessee was entitled to avail benefits of the treaty between India Singapore in accordance with Article 24 of the said treaty. Thus, the Ld. A.R. prayed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 arising from the above journey as it was not eligible for exemption as the vessel had not performed international traffic. (iv) Further, the AO in para 5 of his order also held that the benefit of Article 8 in the DTAA agreement between India and Singapore, the benefit of taxation would be available to an enterprise only if the ship operated in International traffic which was not the case here as the vessel operated in Indian waters. (v) The AO in para 2 of his order has noted the fact that the goods were loaded at Mundra port to be discharged at Mumbai. The assessee has not produced any documents to show that the goods loaded at Mundra was in continuation to the foreign journey by the vessel, otherwise how can it explain the berthing of the vessel at Dharamtar Port for almost 28 days after which it was converted to foreign run. Further, if the vessel was indeed on an onward journey to a foreign destination, then what was the need to obtain the two conversion certificates as mentioned above. (vi) The assessee before the CIT(A) as well as before the Tribunal has tried to prove that the above journey was in fact a part of the international journey which it undertook from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singapore DTAA holding that as per Article 24 an income which is not taxed in Singapore cannot be granted tax exemption in India. Article 24 makes it clear that what has not actually suffered tax in one country cannot at all be allowed treaty benefit in the other country, and therefore denied the benefit of Article 8 of the India- Singapore tax treaty. The Ld. AR in his submission dated 08.06.2023 has relied upon the decision of the Chennai ITAT in the case of Bengal Tiger Line Pte. Ltd. Chennai Vs. DCIT which was pronounced on 04.05.2023 which is not applicable in present case. 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the M/s. Magnum Shipping Services filed provisional return on 29.09.2016 for the vessel M. V. New Caledonia Maru. The vessels sailed on 01.10.2016 and the final return was filed on 21.10.2016 for the vessel under Section 172 of the Income Tax Act. It is undisputed fact that freight beneficiary for the said vessel was M/s. Jaldhi Overseas Pte. Of Singapore. The provisional return filed before the Revenue Authorities was accompanied with certain details such as charter party agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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