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2022 (10) TMI 600 - ITAT KOLKATAIncome deemed to accrue or arise in India - profit derived “Profits derived from the operation of ships or aircraft in international traffic” - Indo-Bhutan DTAA - taxation in the contracting state - AO rejected the claim of the assessee only on the ground that the term “Profits derived from the operation of ships or aircraft in international traffic” has been more elaborately explained to include the transportation of air passengers - HELD THAT:- As per the law laid down by the Hon’ble Supreme Court in the case of “Union of India vs. AzadiBachaoAndolan” [2003 (10) TMI 5 - SUPREME COURT] where a specific provision is made in the DTAA, that provision will prevail over the general provisions contained in the Income Tax Act if, the same is more beneficial to the assessee as provided under section 90(2) of the Income tax Act. Since there article 8 of the Indo Bhutan DTAA is more beneficial to the assessee, therefore the profits derived by the assessee from the operation of ships or aircraft in international traffic are liable to be taxed in the contracting state in which its place of effective management of the enterprise is situated, which undisputedly is Bhutan. From definition the profit derived “Profits derived from the operation of ships or aircraft in international traffic”, in the India- Singapore DTAA is exhaustive enough not only to include the air passengers but also mail, livestock or goods. There is nothing mentioned in the India-Singapore DTAA to make an inference that the profits from transport of air passengers should not be covered under Article 8 of the Indo-Bhutan DTAA. - Decided in favour of assessee.
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