TMI Blog2013 (12) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... ement between two countries has ousted the jurisdiction of the taxing officer in India to tax the profits derived by the enterprise once it is found that the ship belongs to a resident of the other contracting country - Circular No.333 states that the provisions made in DTAA would prevail over the general provisions of the Act and Circular no.732 clarifies that if ships are owned by an enterprise belonging to a country with which India has entered into an agreement of avoidance of double taxation and the agreement provides for taxation of shipping profits only in the country of which the enterprise is a resident, no tax is payable by such ships at the Indian ports - The income earned by the assessee is not taxable in India – Decided in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee company filed its return of income for the assessment year 2003-04 declaring its income to the tune of Rs. 7,17,54,274/-. The assessee computed tax under the provisions of section 44B of the Act. However, the assessee claimed exemption in view of the India-Cyprus DTAA and claimed nil tax liability. 3. The Assessing Officer rejected the contention of the assessee and computed the tax on the income determined by the assessee u/s.44B of the Act. The Assessing Officer after levy of interest under section 234A, 234B and 234C raised the demand of Rs. 6,89,65,438/- against the assessee. The Assessing Officer did not accept the submissions of the assessee for the following reasons:- (i) M/s. BTL India is the sole agent of M/s. BTL, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppearing on behalf of the assessee submitted that the assessee has no permanent establishment in India. The Indian subsidiary of the assessee company i.e. Bengal Tiger Line India Pvt. Ltd. is getting commission from the assessee company for booking orders for the assessee. The income earned by the assessee is exempt under Article 8 of the India Cyprus DTAA. The AR further submitted that the Revenue has invoked the provisions of Article 7 which relates to business profits through permanent establishment situated in India, whereas Article 8 specifically deals with income from shipping and air transport. The provisions of Article 8 overrides the provisions of Article 7 and as such the income of the assessee from shipping business is taxable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits of an enterprise having permanent establishment in India. Article 7 specifically states that such profits shall be taxable only in that State unless the enterprise carries on business in other contracting State through a permanent establishment situated therein. The Article 8 of DTAA deals with shipping and air-transport business. Article 8 provides that profits derived by enterprise registered and having headquarters (i.e. effective management) in a Contracting State from the operation by that enterprise of ships or aircraft in international traffic shall be taxable only in that State i.e. profits from operation of ships or aircrafts in international traffic shall be taxable only in the Contracting State in which the place of effec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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