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2015 (10) TMI 1268 - AT - Income TaxAssessment under section 172(4) - vessel MT Alabra - whether in view of the limitation of benefits provisions set out in the Indo Singapore treaty, the assessee can indeed be declined the benefits of India Singapore tax treaty? - Held that:- There is no dispute that the business is being carried on by the assessee in Singapore and that the assessee is tax resident of Singapore. By letter dated 31st December 2013 (Reference no. 200716495G), Inland Revenue Authority of Singapore has confirmed that, in the case of Albara Shipping Pte Ltd, “freight income has been regarded as Singapore sourced income and brought to tax on an accrual basis (and not remittance basis) in the year of assessment”. The assessee has also filed a confirmation dated 4th December 2013 from its public accountant that the freight of US $ 6,71,366 earned on MT Albara’s sailing from Sikka port has been included in the global income offered to tax by the company in Singapore. On these facts, in our considered view, the provisions of Article 24 cannot be put into service as this provision can only be triggered when twin conditions of treaty protection, by low or no taxability, in the source jurisdiction and taxability on receipt basis, in the residence jurisdiction, are fulfilled. The only reason for declining Indo Singapore tax treaty benefits was the application of Article 24 and that there is no other dispute on the claim of treaty protection of shipping income under article 8(1) which provides that, “Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State”. In this view of the matter, entire freight income of the assessee, which is only from operation of ships in international traffic, is taxable only in Singapore. The Assessing Officer was thus in error in bringing the same to tax in India. We uphold the plea of the assessee and direct the Assessing Officer not to tax income of the assessee, from operation of ships in international traffic, in India. The assessee gets the relief accordingly. - Decided in favour of assessee.
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