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Alabra Shipping Pte Ltd, Singapore Versus Income Tax Officer- International Taxation Gandhidham

2015 (10) TMI 1268 - ITAT RAJKOT

Assessment 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 .....

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rovisions 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 tha .....

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f the assessee, from operation of ships in international traffic, in India. The assessee gets the relief accordingly. - Decided in favour of assessee. - I.T.A. No.: 392/RJT/2014 - Dated:- 9-10-2015 - Pramod Kumar AM and Rajpal Yadav JM For The Appellant : Paurami Sheth For The Respondent : Yogesh Pandey ORDER Per Pramod Kumar AM: 1. By way of this appeal, the assessee appellant has challenged correctness of the order dated 21st March 2014 passed by the learned CIT(A) in the matter of assessment .....

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is return, the Assessing Officer noticed that while the assessee has claimed the benefit of India Singapore Double Taxation Avoidance Agreement [(1994) 209 ITR (St) 1; hereinafter referred to as Indo-Singapore tax treaty], the funds were remitted to freight beneficiary s account with The Bank of Nova Scotia in London UK. It was in this background, and noting that the freight has been remitted to a country other than Singapore and that remittance to Singapore is a sine qua non for availing the be .....

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port of this contention, certificate dated 31st December 2013 from Singapore Inland Revenue Service and certificate dated 4th December 2013 from Independent Public Accountant in Singapore were also filed. It was contended that the provisions of Article 8 of Indo- Singapore tax treaty will apply to this case, and, accordingly, the freight receipts by the ASPL-S cannot be brought to tax in India. None of these submissions, however, impressed the CIT(A). He took note of a decision of this Tribunal, .....

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certificate from the bank that the sum has been remitted to Singapore, I hold that the benefit of Article 8 cannot be availed by the appellant and that accordingly, the actions of the AO are confirmed . 3. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 4. The short issue that we are really required to adjudicate on in this case is whether or not, in view of the limitation of benefits provis .....

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77], these LOB clauses are relevant only for the purposes of treaty protection related to protocol article 1. Coming back to Article 24, for the sake of ready reference, this provision is reproduced below: ARTICLE 24 Limitation of relief 1. Where this Agreement provides (with or without other conditions) that income from sources in a Contracting State shall be exempt from tax, or taxed at a reduced rate in that Contracting State and under the laws in force in the other Contracting State the said .....

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erson approved by the competent authority of that State for the purpose of this paragraph. The term "Government" includes its agencies and statutory bodies. 6. As a plain reading of Article 24(1) would show, this LOB clauses comes into play when (i) income sourced in a contracting state is exempt from tax in that source state or is subject to tax at a reduced rate in that source state, (ii) the said income (i.e. income sourced in the contracting state) is subject to tax by reference to .....

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orial method of taxation is followed by a tax jurisdiction and the taxability for income from activities carried out outside the home jurisdiction is restricted to the income repatriated to such tax jurisdiction, as in the case of Singapore, the treaty protection must remain confined to the amount which is actually subjected to tax. Any other approach could result in a situation in which an income, which is not subject matter of taxation in the residence jurisdiction, will anyway be available fo .....

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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 .....

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this material was duly confronted to the Assessing Officer, in the remand proceedings, and the Assessing Officer could not demonstrate that the stand taken by the ASPL-S in this regard was incorrect. 8. As regards reliance of the authorities below on the decision of this Tribunal, in the case of Abacus International (supra), suffice to say that it was in the context of interest income of the assessee and there was nothing on record to suggest that such an income was to be taxed in Singapore on a .....

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