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2022 (12) TMI 112 - AT - Income TaxIncome deemed to accrue or arise in India - Shipping income for voyages performed by the vessels u/s 172 - DTAA between India and Singapore - freight income earned from the voyage performed - qualify for tax exemption in India - As submitted freight income was not directly remitted to Singapore and the freight income was never subjected to tax in Singapore - HELD THAT:- IRAS Authority have stated that the assessee company derives shipping income (charter income) from third party from export voyages from Indian ports. The assessee company would report the chartered income in its Singapore Tax Return for the years of Assessment 2017 and 2018. It is clarified that Article 24(1) of India-Singapore DTAA is not applicable to the charter income derived by the assessee on the voyages from Indian ports. For the reason that the income, if accruing in or derived from a business carried on in Singapore. The chartered income is, therefore, shipping income sourced in Singapore and assessable to tax at Singapore on accruing and not on remittances basis, for the Year of Assessment 2016 and 2017. It is further clarified that a physical flow of funds is therefore not relevant and the chartered income is subject to tax in Singapore on remittances basis. As clarified that Article 24(1) does not apply to the shipping income received by a Singapore Shipping Enterprises from Indian customers and the shipping income is taxable in Singapore, on an arising basis when the income is earned by the shipping enterprise regardless of whether the shipping income is received in or remitted to Singapore. Since Article 24(1) is not applicable, the provisions of Article 8(1) should apply without any limitation. As such the shipping profits derived by a Singapore resident shipping enterprise from the operation of ships in international traffic shall be taxable only in Singapore in accordance with Article 8(1) and the same does not confer the Indian Authorities to the right to tax such profits. We find this view has been followed by the Chennai Benches of the Tribunal in M/s. Bengal Tiger Line Pte. Ltd. [2020 (11) TMI 567 - ITAT CHENNAI] We held that the Assessing Officer and Ld. DRP was not justified in denying the benefit of Article 8 by invoking the limitation of Article 24 between India and Singapore DTAA following Jurisdictional High Court judgment in M.T. Maersk Mikage v. DIT (International Taxation) ([2016 (9) TMI 19 - GUJARAT HIGH COURT] We are therefore of the considered opinion that the exercise under taken by the Assessing Officer and the Ld. DRP in co-relating the remittances and denying the certificate issued by the Singapore Tax Authorities is not proper and both the Assessing Officer and the Ld. DRP has not considered the Singapore Income Tax Returns filed by the assessee. In view of the above the order of the lower authorities namely final Assessment Order passed by the Assessing Officer and directions issued by Ld. DRP are hereby set-aside and they are directed to allow the benefit of Article 8 to all the voyages carried out by the assessee in this appeal. Appeals filed by the assessee are allowed.
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