TMI Blog2017 (5) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... om IRAS could be obtained from the concerned authority only after the date of the assessing officer orders. However, a similar earlier letter was dully shown to the assessing officer, however the A.O. did not dwell upon on this aspect. Hence Ld. Counsel submitted that there was reasonable cause for not submitting the additional evidence before the A.O. Upon careful consideration we find that this limb of adjudication by the tribunal was not at all before the authorities below. However it is clear that argument to that effect were duly made as it is evident from the submissions of the assessee. However, we note that the aforesaid confirmation/certificate from IRAS is a very crucial document and similar document was heavily relied upon by the tribunal in aforesaid orders. 15. We also agree that there was reasonable cause for the same not being submitted before the A.O., as it was obtained after the date of AO’s orders. Hence in our consider opinion interest of justice will be served if the aforesaid additional evidence is admitted and matter is remitted to the file of the A.O to consider the issue afresh in the light of the aforesaid document and the tribunal’s order as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singapore under the tax laws of Singapore. The Appellant prays that the benefit of Article 8 of Tax Treaty should be accordingly allowed to the Appellant in the present case. 3. Ground No. 3 3.1. Without prejudice to the above, the Hon'ble DRP and learned DCIT erred in not appreciating that the condition of remittance to Singapore prescribed in Article 24 has been satisfied as the freight collections have been ultimately remitted to the Appellant's bank account in Singapore. 3.2. The Hon‟ble DRP erred in not accepting the bank statements in support of remittance of freight collections to Singapore. The Appellant prays that the benefit of Article 8 of Tax Treaty should be accordingly allowed to the Appellant in the present case. Ground No. 4 4.1. On the facts and in the circumstances of the case and in law, the Hon'ble DRP and learned DCIT erred in holding that the Appellant has a fixed place Permanent Establishment ('PE') in India under Article 5(1) of the Tax Treaty. 4.2. On the facts and in the circumstances of the case and in law, the Hon'ble DRP and learned DCIT erred in holding APL India Private Limited ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a reduced rate in that Contracting State and under the laws in force in the other Contracting 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 first-mentioned 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 Contracting State or any person approved by the competent authority of that State for the purpose of this paragraph. The term Government includes its agencies and statutory bodies. In reply, the assessee has stated that the freight receipt available for remittance after excluding the expenses incurred in India and certain amounts retained in India for specific purposes have been remitted to the assessee's account with Citibank, New York. The assessee has also stated that the said remittance to New York have been transferred to Singapore. However, the assessee has failed to produce any documents/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While dealing with the assessee objection the DRP in para 4.5.1 held as under: We have considered the facts of the case and submissions made by the assessee. It has been argued that article 24 of DTAA of India with Singapore is not applicable to the assessee and instead Article 8 of the DTAA is applicable to it. However, we find that in the assessee's own case in A Y 2008-20091 the CIT (Appeals) order was against the assessee and it has filed an appeal against the said order with Mumbai ITAT. There being no change in the facts and circumstances, respectfully following the said decision for A.Y, 2008-09, we decline to interfere. As the assessee has also not been able to state as to why the additional evidence was not filed before the AO, we do not permit the filing of these evidence at this stage. Accordingly, the assessee's objection is rejected especially relying on the decision of Mumbai ITAT in the case of Thoresen Chartering Singapore {Pte} Limited. [(2009) 315 ITR (AT) 376 (Mumbai)]. 7. Further in Para 5.3.1 the DRP held as under: We have considered the facts of the case and submissions made by the assessee. it has been argued that the assessee has remi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the full amount thereof, then the exemption or reduction of tax to be allowed under this Agreement in the first-mentioned 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 Contracting State or any person approved by the competent authority of that State for the purpose of this paragraph. The term Government includes its agencies and statutory bodies. The aforesaid Article provides a limitation on relief provision related to remittance basis of taxation which is applied in few countries like Singapore and United Kingdom. Under the remittance basis of taxation, income arising outside the country is taxable not when the income is earned or arises or is derived, but only when that income is remitted to and received in the resident country. In Singapore, the resident companies are generally taxed on income accruing in or derived from Singapore on accrual basis, however, income accruing or derived from outside Singapore is taxed on remittance basis. This is the consequence of Sec. 10(1) of Singapore Income Tax Act, which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terprises should file their statement of each year of assessment for the amount of income derived from its operations of Singapore or foreign ships in Singapore. The entire income is to be disclosed in the return of income and the statement is issued when the Comptroller of Income-tax is satisfied that a company has correctly reported its income accrued in or derived from Singapore from its business carried on in Singapore. We have already perused the copy of the return of income along with the computation filed with the IRAS for the year ending on 31.12.2008, relevant for Assessment Year 2008-09, copy of which is appearing from pages 23 to 30 of the paper book. In the said return, the column mentioning the foreign income received in Singapore has been reported to be NIL‟, whereas income accruing in or derived from Singapore has been shown at SGD 2,207,928. A confirmation/Certificate has also been obtained from IRAS, the content of which is reproduced hereunder:- Dear Sir/Madam APL Co. Pte Ltd. ( the company ) FREIGHT INCOME YEARS OF ASSESSMENT ( YAs ) 2008 2009 1. We refer to our discussions on the subject. 2. You have stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of a shipping company, M.T. Maersk Mikage vs. DIT (IT) (supra).The relevant observations of Hon‟ble Court are reproduced hereunder:- 15.This brings us to the core issue strenuously debated by both sides viz. that of applicability of Article 8 vis-a-vis Article 24 of DTAA. We may quickly refresh the facts. ST Shipping is a company based in Singapore. Through the shipping business carried out at Indian ports, ST Shipping earned income, on which, it claims immunity from Indian income tax. The Revenue contends that the remittance of such accrued income not having taken place at Singapore, Article 24 will apply and consequently Article 8 providing for avoidance of table taxation would not apply. 16.The fact, that the income in question which arises out of shipping operations by virtue of Clause-1 of Article 8 of the DTAA would be taxable only in Singapore, is not in serious dispute. The moot question therefore is whether operation of Article 8 is ousted by virtue of Clause-1 of Article 24. As noted, Article-24 of DTAA pertains to limitation of relief. Under clause-1 thereof where the agreement provides that the income from sources in contracting states (in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singapore on the basis of accrual and not remittance. This would knock out the very basis of the Assessing Officer and Commissioner for invoking clause-1 of Article 24 of DTAA. Both the authorities considered the question of remittance of income as the sole requirement for invoking Article 24.1 of DTAA an interpretation which according 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 non-remittance 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 accrual, the very basis for applying clause-1 of Article 24 would not survive. The contention of Shri Mehta for revenue that the certificate of the Singapore revenue authorities is opposed to provisions of section 10 of the Singapore Income Tax Act als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 liable to pay tax in India by virtue of Article 8 of the DTAA between the said two countries. It was held that a person does not have to actually pay taxes in other country to be entitled to benefit of DTAA. We may notice that a somewhat similar issue came up before this Court in case of Director of Income-Tax (International Taxation) v. Venkatesh Karrier Ltd. reported in 349 ITR -124, in which the Court observed as under: 10.After taking into consideration the above circulars issued by the Board and also the provisions contained in Article 8 of the DTAA, we find that both the Tribunal below and the CIT [Appeals] rightly held that in such a situation, the owner of the ship being admittedly a resident of UAE, there was no scope of taxing the income of the ship in any of the ports in India. The agreement between the two countries has ousted the jurisdiction of the taxing officers in India to tax the profits derived by the enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2008-09 dealt with as above. However we note that in its direction the DRP has noted that assessee has sought to file addition evidences in the DRP and declined to admit the addition evidences on the ground that assessee had not been able to state as to why the addition evidence was not filed before the assessing officer. In this regard Ld. Counsel submitted that the addition evidence, that the DRP mentioning is a letter /confirmation/certificate from the IRAS (Inland Revenue Authority of Singapore) which clarified the assessee position for the impugned assessment year in the same manner as mentioned in the tribunal s orders above. Ld. Counsel submitted that this certificate/confirmation from IRAS could be obtained from the concerned authority only after the date of the assessing officer orders. However, a similar earlier letter was dully shown to the assessing officer, however the A.O. did not dwell upon on this aspect. Hence Ld. Counsel submitted that there was reasonable cause for not submitting the additional evidence before the A.O. 14. Upon careful consideration we find that this limb of adjudication by the tribunal was not at all before the authorities below. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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