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TMI Blog2018 (6) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... the DRP in accepting assessee's claim that the income from early settlement of forward foreign exchange contract is to be assessed under the head "Capital Gain" and not under the head "Income from Other Sources". 4. Brief facts are, the assessee is a tax resident of Singapore. For the assessment year under dispute, the assessee filed its return of income on 30th September 2011, declaring total income of Rs. 10,79,86,878. During the assessment proceedings, the Assessing Officer noticed that the assessee has incurred loss of Rs. 21,29,40,000 on cancellation of forward foreign exchange contract which has been treated as short term capital loss and assessee has sought carry forward of the same to future years. Being of the view that forward f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Sr. Counsel, Shri P.J. Pardiwala, appearing for the assessee submitted that the issue in dispute is decided in favour of the assessee by the Tribunal in assessee's own case for assessment year 2005-06, 2006-07 and 2008-09. Copy of the orders are also placed before the Bench. 7. The learned Departmental Representative, Shri M. V. Rajguru agreed that the issue in dispute has been decided in favour of the assessee in the preceding assessment years. 8. We have considered rival submissions and perused materials on record. As could be seen, this is a recurring dispute between the assessee and the Department from the preceding assessment years. While deciding the issue in assessment years 2005-06 and 2006-07 in ITA no.4583/Mum./2009 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he worldwide income is to be taxed in Singapore, the remittance of such income to Singapore is of no relevance for the purpose of claiming benefit under the India Singapore Tax Treaty. The Assessing Officer, however, did not find merit in the submissions of the assessee. Though, he accepted that provisions of Article-13(4) of the India-Singapore Tax Treaty allows exemption of capital gain in the source country i.e., India, however, the provisions of Article-24 provides for restriction of such exemption in respect of capital gain to the extent of income repatriated to the country of residence i.e., Singapore. Referring to section 10(1) of Singapore Income Tax Act, the Assessing Officer observed that as per the said provision income has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness operation including trading in securities from Singapore. Thus, it was held that as per Article-13(4) of the India Singapore Tax Treaty, Singapore has the exclusive right to tax the income and the restriction / conditions imposed under Article 24 of the Tax Treaty would not apply. Referring to the observations of the Assessing Officer that the restriction of exemption would only apply to the extent of repatriation of income to Singapore, the DRP observed that once it is held that the capital gain is to be taxed in the country of residence of the assessee, the applicability of Article-24 becomes redundant, since, the income is taxable in Singapore with reference to full amount and not with reference to the amount remitted or received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is a tax resident of Singapore. Even, the factual finding recorded by the learned DRP that assessee does not have a PE in India and it is carrying on its business operation, including trading in Indian Securities, from Singapore has not been controverted by the Department. Undisputedly, in course of such activity of trading in Indian Securities assessee has derived short term capital gain which has been claimed as not taxable in India under Article-13(4) of the India-Singapore Tax Treaty. However, the Assessing Officer referring to Article-24 of the Tax Treaty has held that the exemption would apply only to the extent of the amount repatriated / remitted to Singapore. In our view, the aforesaid conclusion of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoking Article-24 of the India Singapore Tax Treaty. In our considered opinion, applicability of Article-24 of the Indian Tax Treaty will not arise in the present fact situation. On a careful reading of Articl-24 of India Singapore Tax Treaty, it becomes clear that if income derived from a contracting State is either exempt from tax or taxed at a reduced rate in that contracting State, whereas, the amount remitted or received out of such income in other contracting State is taxable in the other contracting State to the extent of such remittance or receipt, then the exemption or reduction of tax to be allowed under the Tax Treaty in respect of income derived in the contracting state shall be limited to the amount remitted or received in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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