Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

M.T. MAERSK MIKAGE AND 4 Versus DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)

Applicability of Article 8 visavis Article 24 of DTAA - income assessable to tax at Singapore on the basis of accrual or remittance - Held that:- The certificate dated 09.01.2013 issued by the Inland Revenue Authority of Singapore assumes significance. In the said certificate, as noted, it was certified that the income in question derived by ST Shipping would be considered as income accruing in or derived from the business carried on in Singapore and such income therefore, would be assessable in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uthority in the said certificate and this declaration is that the income would be charged at Singapore considering it as an income accruing or derived from business carried on in Singapore. In other words, the full income would be assessable to tax on the basis of accrual and not on the basis of remittance. This certificate was before the Commissioner while he passed the impugned order. The contents of this certificate were not doubted. - If that be so, what emerges from the record is that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e is taxed by a contracting State not on the basis of accrual, but on the basis of remittance, applicability of Article 8 would be ousted to the extent such income is not remitted. This clause does not provide that in every case of nonremittance of income to the contracting state, Article 8 would not apply irrespective of tax treatment such income is given. When in the present case, we hold that the income in question was not taxable at Singapore on the basis of remittance but on the basis of ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

MR. AKIL KURESHI AND MR.A.J. SHASTRI, JJ. FOR THE PETITIONER : MR B S SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Petitioner has challenged an order dated 25.03.2014 passed by the Commissioner of Income-tax, Ahmedabad, by which, he dismissed the petitioner's revision petition under section 264 of the Income Tax Act, 1961 ('the Act' for short) and thereby confirmed an order dated 26.12.2011 passed by t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ess of operating ships in the international waters. ST Shipping is a taxed resident of Singapore. 4. During the period relevant to assessment year 2011-12, ST Shipping had through ships owned or chartered by it, undertaken voyages from various Indian ports and earned income from exporters and out of other such business. ST Shipping through present petitioner, filed a return of income under section 172(3) of the Act, declaring the gross profit calculations, but claiming Nil income by relying on A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

8 of DTAA by virtue of the provisions contained in Article 24 therein. He noted that the fright receipts were remitted to London and not to Singapore. In his opinion, as per Article 24 of DTAA, the funds have to be remitted where the residents of the country is claiming benefit of the agreement which conditions in the present case was not satisfied. He held as under: 6. It is therefore amply clear that the funds were remitted to London and not in Singapore. The Article 24 of the DTA Agreement b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

allowed and is hereby rejected. The assessee furnished inaccurate particulars in the sense that it had claimed exemption of freight where it was not allowable. Though the DTA Agreement is a public document and the assessee had clear and complete access to the agreement, it ought to have claimed exemption as per the provisions of law. By completely ignoring the provisions of Article 24 of the DTA Agreement, the assessee has committed a breach of trust and has falsely claimed exemption of freight .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hargeable to tax; on which he levied tax of ₹ 46.72 lacs at the prescribed rate. He also initiated penalty proceedings under section 271(1)(c) of the Act. 7. At one stage, the petitioner filed appeal against the said order of assessment dated 26.12.2011. However, under the apprehension that at a future date the question of maintainability of such appeal may arise in view of the language used in section 246 and 246A of the Act, such appeal was withdrawn and instead a petition under section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

derived by the ST Shipping would be considered to be income accruing in or derived from a business carried on in Singapore and the income would be therefore assessable to tax in Singapore on accrual basis. This was in response to the petitioner's letter to the said Revenue authority of Singapore concerning the applicability of Article 24 of the DTAA. The contents of the letter dated 09.01.2013 of the authority may be reproduced. We refer to your letter dated 2 January 2013. 2. You have state .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

8 of the SingaporeIndia DTA to the profits of your company were limited by the provisions of Article 24.1 of the said DTA which state that any reliefs provided by the DTA would only apply to the amount of income remitted into Singapore. As such, the Indian tax authorities were likely to impose a tax on your company's charter income. 4. Based on the information provided in your letter, we would consider the charter income derived by your company to be income accruing in or derived from a bus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e. For clarity, we should add that Article 24.2 seeks to make clear that Article 24.1 does not apply to Government income. Accordingly, Article 24.2 is not relevant to income derived by a taxpayer where the income is assessable to tax in Singapore by reference to the amount remitted to or received in Singapore. 5. We hope that this is sufficient to address your query. If you require any further clarifications, please do not hesitate to contact us. 9. The Commissioner of Income-tax however by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ity of Article 24 has also been examined by this office. The fact that the amount has not been remitted to Singapore has not been denied by the petitioner. Article 24 of the DTAA between India and Singapore does not talk about the issue of taxability of the amount not remitted to Singapore. Hence, the attempt of the Petitioner to prove the taxability of the amount in Singapore is of no consequence so far as interpretation of Article 24 of the Treaty is concerned. Once the factum of remittance no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uments furnished before this office have also been furnished before CIT(A), Gandhinagar. The CIT(A) has discussed all the above evidences before arriving at a conclusion that the claim of the assessee on all these three issues is liable to be rejected. 10. Before recording the rival contentions, we may reproduce relevant provisions of the DTAA. Article 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ompetent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation laws. Article 4 RESIDENT 1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who is a resident of a Contracting State in accordance with the taxation laws of that State. Article 8 SHIPPING AND AIR TRANSPORT 1. Profits derived by an enterprise of a Contracting State from the operation of ships or airc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on to such interest. 4. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall mean profits derived from the transportation by sea or air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of the ships or aircraft, including profits from: (a) the sale of tickets for such transportation on behalf of other enterprises; (b) the incidental lease of ships or aircraft used in such transportation; (c) the u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

acting State the said income is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this Agreement in the firstmentioned Contracting State shall apply to so much of the income as is remitted to or received in that other Contracting State. 2. However, this limitation does not apply to income derived by the Government of a Contra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ingly taxed. In terms of Article 8 of the DTAA therefore, the same could not be taxed in India. II. The interpretation adopted by the Revenue authorities to Article 24 of DTAA is wholly erroneous. Clause1 of Article 24 would apply only in a case where such income is to be taxed in Singapore only on remittance basis, a condition not fulfilled in the present case. In this context, counsel placed heavy reliance on the certificate dated 09.01.2013 issued by the Inland Revenue Authority of Singapore. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nnot be taxed in India. In this context, counsel relied on the decision of Division Bench of Delhi High Court in case of Emirates Shipping Line, FZE v. Assistant Director of Income-tax reported in [2012] 349 ITR 493 (Delhi) and of the Supreme Court in case of Union of India and Another v. Azadi Bachao Andolan and Another reported in 263 ITR 706. 12. On the other hand, learned counsel Shri Nitin Mehta for the department opposed the petition contending; I. The revision petition before the Commissi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re is contrary to section 10 of the Singapore Income Tax Act, which would make it clear that unless income of any person accrues in or is derived from Singapore, the same would be taxed only on the basis of actual receipt. IV. Even otherwise, there is no evidence to show that the assessee had offered such income to tax in Singapore and that the assessee was actually taxed on such income. If for any reason, the income was exempt from payment of tax, Indian Revenue authorities would be entitled to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion or on application by assessee, call for the record of any proceedings in which, such an order has been passed and may make inquiry and subject to the provisions of the Act, pass such order thereon not being an order prejudicial to the assessee, as he thinks fit. Thus, under subsection (1) of section 264, the Commissioner has power either on his own motion or on the petition filed by the assessee to revise an order passed by a subordinate officer subject to the provisions of the Act. Subsect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ppellate Tribunal but has not been made and the time within which such appeal may be made has not expired, or, in the case of an appeal [to the Commissioner (Appeals) or] to the Appellate Tribunal, the assessee has not waived his right of appeal; or (b) where the order is pending on an appeal before the [Deputy Commissioner (Appeals)]; or (c) where the order has been made the subject of an appeal [to the Commissioner (Appeals) or] to the Appellate Tribunal. 14. It is therefore, clear that the Co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction 246 and 246A of the Act, would not prevent the assessee from presenting a revision petition within the framework provided under section 264 of the Act. In fact, the Commissioner had not even dismissed the petition as not maintainable. 15. This brings us to the core issue strenuously debated by both sides viz. that of applicability of Article 8 visavis Article 24 of DTAA. We may quickly refresh the facts. ST Shipping is a company based in Singapore. Through the shipping business carried out .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e moot question therefore is whether operation of Article 8 is ousted by virtue of Clause1 of Article 24. As noted, Article24 of DTAA pertains to limitation of relief. Under clause1 thereof where the agreement provides that the income from sources in contracting states (in the present case, India) shall be exempt from tax or tax at a reduced rate and under the laws in force in other contracting states (i.e. Singapore), such income is subject to tax by reference to the amount thereof which is rem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er Article 8 either in whole or in part would be excluded. 17. It is, in this context, that the certificate dated 09.01.2013 issued by the Inland Revenue Authority of Singapore assumes significance. In the said certificate, as noted, it was certified that the income in question derived by ST Shipping would be considered as income accruing in or derived from the business carried on in Singapore and such income therefore, would be assessable in Singapore on accrual basis. It was elaborated that th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

any rebuttal material produced by the Revenue, we would certainly be guided by the factual declaration made by the said authority in the said certificate and this declaration is that the income would be charged at Singapore considering it as an income accruing or derived from business carried on in Singapore. In other words, the full income would be assessable to tax on the basis of accrual and not on the basis of remittance. This certificate was before the Commissioner while he passed the impug .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing to us does not flow from the language used. As noted the essence of Article 24.1 is that in case certain income is taxed by a contracting State not on the basis of accrual, but on the basis of remittance, applicability of Article 8 would be ousted to the extent such income is not remitted. This clause does not provide that in every case of nonremittance of income to the contracting state, Article 8 would not apply irrespective of tax treatment such income is given. When in the present case, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he same are opposed to the statutory provision. 19. By way of a reference, we may notice that the Tribunal also in case of this very assessee in case of Alabra Shipping Pte Ltd. v. Income-tax Officer - International Taxation, Gandhidham, reported in 62 Taxmann.com 185 has taken a somewhat similar view by observing as under: 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f income which is eventually subject matter of taxation in the source country. This is all the more relevant for the reason that in a situation in which territorial 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 ot .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to be raised by the Revenue viz. of the actual tax being paid by the assessee on such income at Singapore. On the ground that such income is exempt from payment of tax, the Revenue desired to impose tax in India. In this context, the petitioner has relied on the decision of Delhi High Court in case of Emirates Shipping Line, FZE (supra), in which it was held that the assessee, a UAE based shipping company, whose income from such business was exempt from tax in such country, would still not be l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Excise duty credit on finished stock at additional place of business.

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Forum: GST rates on mobile recharge business

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version