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2017 (8) TMI 406 - AT - Income TaxApplicability of Article 8 vis-a-vis Article 24 of DTAA - DTAA between India and Singapore - shipping income - returns of the voyages u/s. 172(3) - denial of the benefit on the ground that assessee has not substantiated the remittance of money to Singapore in all the voyages Held that:- As in M.T. Maersk Mikage & Ors. Vs. DIT [2016 (9) TMI 19 - GUJARAT HIGH COURT ]clinches the issue in favour of assessee, as the Hon'ble High Court has categorically held that the shipping company is not taxable in Singapore on the basis of remittance, but on accrual basis and therefore, para-1 of Article 24 would not be applicable Whether the provisions of Article 24 will apply when the shipping income is taxed in the other contracting state exclusively by Article 8. - This issue is analysed and considered by the Co-ordinate Bench in the case of APL Co. Pte Ltd., Vs. ADIT(IT)-1(1) [2017 (2) TMI 849 - ITAT MUMBAI], wherein it was held that, Whence India does not have any taxation right on a shipping income of non- resident entity, which is exclusive domain of the resident state, there is no question of any kind of exemption or reduced rate of taxation in the source state. It only envisages territorial and jurisdictional rights for taxing the income and India has no jurisdiction for any taxing right which are governed by Article 8. There is no stipulation about exemption under Article 8 of the shipping income AO/ Ld.CIT(A) was not justified in denying the benefit of Article 8 by invoking the limitation clause of Article 24 of India – Singapore DTAA. The exercise undertaken by the AO and CIT(A) in correlating the remittances and denying the certificate issued by the Government authority of Singapore is not proper and can further hold that they have no jurisdiction to enquire into those matters, once Article 8 is invoked. The shipping income is to be exclusively taxed by the other contracting state once the residence of the ship is established. Since there is no dispute with reference to residence of the ship being that of Singapore, the jurisdiction to tax the remittances specified therein under Article 8 lies exclusively with Singapore. In view of that, the orders of the AO and CIT(A) are set aside and they are directed to allow the benefit of Article 8 to all the voyages involved in all these appeals. - Decided in favor of assessee.
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