TMI Blog2023 (5) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... fact of escapement of income is sine qua non to acquire this jurisdiction. Until and unless there is escapement of income, the reopening could not be resorted to under law. We find that in the present case, there are no reasons before Ld. AO to reach such a belief that documentation / vessel handling charges belonged to the assessee and the agent wrongly offered the same to tax. Secondly, there is no escapement of income since the income has already been offered to tax by the agent. Merely because tax rate was higher for principal, the same could not lead to a conclusion that there was escapement of income unless it was conclusively shown that the income of the principal was erroneously offered to tax by the agent. We find that there is no such material before Ld. AO to reach such a conclusion. There is no material to reach a conclusion that the aforesaid income belonged to the assessee. This being the case, reassessment jurisdiction, as acquired by Ld. AO, could not be said to be valid in the eyes of law and the same is, therefore, liable to be termed as bad-in-law. The fulfilment of primary conditions viz. reasons to believe and escapement of income is sine qua non to acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gapore Income Tax Act were already in existence since 01-04-1991 whereas DTAA between the two countries has been signed subsequently on 27-5-1994. Despite that, both the authorities chose not to alter the taxation right of shipping income which is generally available to the country of residence. The DTAA is in the nature of bilateral agreement wherein the two countries have specifically agreed on the taxing rights of particular streams of income. The same has to be given effect to in full, whatever the consequences may be. Any income of a non-resident shipping company which is a tax resident of Singapore is liable to be taxed only in Singapore but not in India. The provision of Article-24 would apply to income which is exempt from tax as per the tax treaty which is not the case since the international shipping income earned by the assessee is not exempted in India. Therefore, the exclusive right of taxation in one contracting state is not the same as the specific exemption being available in other contracting state. Shipping income as dealt by Article-8 states that profits derived by an enterprise of a contracting state by operation of ships in international traffic shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case. 2. Reopening of assessment u/s 147 of the Act is invalid 2.1. The AO/DRP erred in reopening the assessment under section 147 of the Act in the absence of essential conditions necessary for reopening the assessment. 2.2. The AO/DRP ought to have appreciated that section 147 of the Act permits reassessment of income, where AO has reason to believe that any income chargeable to income tax has escaped assessment for any assessment year. 2.3. The AO/DRP ought to have appreciated that reason to believe constitute a condition precedent to the exercise of jurisdiction under section 147 of the Act. 2.4 The AO/DRP ought to have appreciated that the reasons for reopening of the assessment are unsustainable. 2.5 The AO/DRP ought to have appreciated the fact that the subject income for the reassessment has already suffered tax in India and as such reopening cannot be done for an income, which is already taxed. 2.6 The Assessing Officer ought to have considered that there are no fresh material/evidences made available after the assessment proceedings and hence the reassessment merely based on change of opinion is void ab initio. 2.7. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.10. Without prejudice to the aforesaid ground, the Assessing Officer ought to have taxed the documentation charges and vessel handling charges under section44B of the Act. 4. International shipping income from freight operations amounting to INR 10,89,70,019 assessed to tax in India 4.1. The directions of the Dispute Resolution Panel (DRP) 2, Bengaluru (DRP')and the consequential final assessment order is erroneous in so far as assessing the international shipping income from freight operations as income taxable in India under section 44B of the Act. 4.2 The AO / DRP ought to have appreciated that as per Article 8 of the India - Singapore DTAA, any shipping income of a non-resident is taxable only in the country of residence, i.e., Singapore and as such cannot be assessed to tax in India. 4.3 The AO / DRP ought to have appreciated that the essential conditions for invoking the provisions of Article 24 of the DTAA is not satisfied and therefore it cannot be invoked. 4.4. The AO / DRP erred in imputing conditions for applicability of a tax treaty Which are not present anywhere in the India-Singapore DTAA and therefore the order of the AO read with DRP Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable to the Appellant and as such the AO is precluded from taking a different position while completing the assessment. 4.13 The AO/DRP erred in incorrectly interpreting the Vienna Convention while considering the applicability of the DTAA between India and Singapore. 4.14. The DRP grossly failed in not considering the binding decision of the Hon'ble jurisdictional Tribunal in Appellant's own case in IT(TP)A.No.11/Chny/2020 vide order dated 06.11.2020. 4.15. The DRP grossly erred in not considering the detailed written submissions and the Tribunal order in Assessee's own case and thereby violated the principles of natural justice. 4.16 Without prejudice to the above, the DRP ought to have restricted the amount taxable in India by invoking the provisions of Article 24 of the India Singapore DTAA to the amount of income claimed as exempt in Singapore. 5. Miscellaneous 5.1 The AO erred in levying interest under section 234B of the Act. 5.2 The AO ought to have appreciated that the Appellant who is a non-resident is not liable to pay advance tax and as such interest under section 234B of the Act cannot be levied. 6. The Appellant prays that dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO to acquire jurisdiction u/s 147 of the Act. In such a case, the reassessment proceedings would be bad in law as per the decisions of Hon ble Bombay High Court in Techpac Holdings Ltd . vs CIT (67 Taxmann.com 280) as well as the decision of same court in The Swastic Safe Deposit and Investments Ltd. (107 Taxmann.com 421) against which revenue s Special Leave Petition (SLP) was dismissed by Hon ble Supreme Court which is reported as 118 Taxmann.com 94. 2.2 The Ld. AR further submitted that while recording the reasons for reopening, Ld. AO has relied upon Q. No.19 of the survey proceedings wherein it was stated that on document / vessel handling charges, tax was paid by BTIPL at 30% whereas the tax rate in the hands of the assessee would be 40%. Thus, the reopening is made on the sole premise of differential tax rates on the said income. However, a mere difference in tax rate would not amount to escapement of income and reassessment proceedings are liable to be quashed. 2.3 Another line of argument was that the information collected in the hands of some other assessee could not be a basis for reopening the assessment of the assessee. Even the said information did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Laboratories Ltd. (12 Taxmann.com 74); the decision of Hon ble Bombay High Court in Jet Airways (I) Ltd. (195 Taxman 117) the decision of Hon ble Delhi High Court in Blackstone Capital Partners (Singapore) Vi FDI Three Pte. Ltd. (146 Taxmann.com 569). The Ld. AR thus averred that in the absence of any escapement of income, the reopening of assessment is invalid. 2.5 On merits, Ld. AR submitted that even assuming that document / vessel handling charges would be deemed to be the income of the assessee, the same would not be taxable in India by virtue of Article-8 of India-Singapore Double Taxation Avoidance Agreement (DTAA) since it has been admitted by Ld. AO that the said income is part of the business operations being carried on by the assessee and the same are not in the nature of freight income since the same is not included in the invoices raised for freight charges. This being so, this income would also be covered within the scope of Article 8(1) of DTAA and accordingly, not liable to tax in India in the hands of the assessee. The same would also be covered under Article 8(4)(d) of the treaty. Even explanation to Sec.44B was wide enough to cover documentation and vess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontracting state i.e., Singapore has exclusive taxing right on Shipping income. The same is evident from the fact that Ld. AO, after considering the Tax Residency Certificates (TRC) and supporting documents, has issued DIT relief certificates by holding a position that Article-8 of India-Singapore DTAA would apply to the assessee and the income from operation in international traffic will not be taxable in India. This certificate is stated to be issued for multiple assessment years. The CBDT Circular No.30/2016 dated 26-08-2016 clarifies that this certificate is to be issued only after examining the applicability of DTAA to the foreign shipping company. While issuing the certificates, Ld. AO had examined the details / facts and held that Article-8 would apply and therefore, contrary position could not be taken by the revenue in the present proceedings. 2.8 The Ld. AR further submitted that Limitation of Relief (LOR) Article- 24 would not apply since first condition is that the income should be sourced in India. This condition is not fulfilled since it has been confirmed by IRAS in letter dated 17-02-2016 that the shipping income is Singapore sourced income. The second condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on granted in section 13F and that they are not 'subjected to tax' (i.e. actually paid taxes in Singapore) is not a relevant criteria to adjudge whether treaty benefit is available or not. 3) Further, Article 8 uses the words shall be taxable and not shall be taxed . The phrase taxed implies that the taxes are actually paid in Singapore i.e. subjected to tax in Singapore, whereas, the actual phrase used is taxable which does not imply or mandate actual payment of tax, rather it only confers a taxing right to Singapore. 4) Further, the word only clearly asserts that it is the resident state alone that can impose tax (i.e. Singapore) and not the other state (i.e. India). Hence, it is absolute exclusion of jurisdiction for the other contracting state and not any kind of exemption provided in the treaty. 5) Further, the DR in Page 4 of his submission has stated that the word Only has not only been used in Article 8 but also in other Articles such as 7, 13, 14, 15 and 19. It is pertinent to note that although the word Only is used in other Articles, the said other Articles contain additional clauses which enables the other contracting state to tax the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be liable to comprehensive taxation. 9) Further, Late Prof. Klaus Vogel in the Bulletin for International Taxation (Volume 60, No. 6 - 2006 at pages 218-219) published by the International Bureau of Fiscal Documentation, Amsterdam. Prof. Dr. Klaus Vogel, after referring to the Tribunal decision in the case of Green Emirate Shipping Travels, had observed as under: An unusual case decided by the Dutch Gerechtsh of Amsterdam Court of Appeals on 15-2-2006 confirms this decision. The owners of the Dutch company, XBV emigrated from the Netherlands to Greece in 1995 and advised the Dutch tax authorities that they now exercised management and contract from their new location, as a consequence of which the company became a Greek resident. This was not in dispute in May 2000, the taxpayers informed the Dutch authorities that, since their relocation, they had endeavoured to register the company with the Greek Tax authorities, but failed to succeed because of the Greek tax authorities, but failed to succeed because of the Greek bureaucracy the company had not yet been assessed to the Greek corporate income-tax. These facts were not contested by the Dutch authorities. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items and their assignments to the Contracting States. While the English lawyers called it 'classification and assignment rules', the German jurists called it 'the distributive rule' (Verteilungsnorm). To the extent that an exemption is agreed to, its effect is in principle independent of both whether the other contracting State imposes a tax in the situation to which the exemption applies, and of whether that State actually levies the tax. Commenting particularly on German Double Taxation Convention with the United States, Vogel comments: Titus, it is said that the treaty prevents not only 'current', but also merely 'potential' double taxation . Further, according to Vogel, only in exceptional cases, and only when expressly agreed to by the parties, is exemption in one contracting State dependent upon whether the income or capital is taxable in the other contracting state, or upon whether it is actually taxed there. It is, therefore, not possible for us to accept the contentions so strenuously urged on behalf of the respondents that avoidance of double taxation can arise only when tax is actually paid in one of the Contracting States. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n existing liability to pay taxes in UAE is a sine qua non to avail the benefit of India-UAE tax treaty in India. On this issue also, we find guidance from the judgment of Hon'ble Supreme Court in the case of Azadi Bachao Andolan (supra). Referring to the Klaus Vogel's Commentary on Double Taxation Conventions, Their Lordships, inter alia, observed as follows In other words, Contracting States mutually bind themselves not to levy taxes or to tax only to a limited extent in cases when the treaty reserves taxation for the other Contracting State either entirely or in part. Contracting States are said to waive 'tax claims' or more illustratively to divide 'tax sources', 'taxable objects', amongst themselves. Double taxation avoidance treaties were in vogue even from the time of the League of Nations. The experts appointed in the early 1920s by the League of Nations describe this method of classification of items and their assignments to the Contracting States. While the English lawyers called it 'classification and assignment rule ', the German jurists called it 'the distributive rule' (Verteilungsnorm). To the extent that an exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'liable to tax' is not to read in isolation but in conjunction with the words immediately following it i.e., 'by reason of domicile, residence, place of management, place of incorporation or any other criterion of similar nature'. That would mean that merely a person living in a Contracting State should not be sufficient, that person should also have fiscal domicile in that country. These tests of fiscal domicile which are given by way of examples following the expression 'liable to tax by reason of' i.e., domicile, residence, place of management, place of incorporation etc. are no more than examples of locality related attachments that attract residence type taxation. Therefore, as long as a person has such locality related attachments which attract residence type taxation, that 'person' is to be treated as resident and this status of being a 'resident' of the Contracting State is independent of the actual levy of tax on that person. Viewed in this perspective, we are of the considered opinion that being 'liable to tax' in the Contracting State does not necessarily imply that the person should actually be liable to tax in that Contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ann.com 75 has dealt with the interplay between the Article 13 and 24 and after considering relevant clauses categorically held that income derived by a resident of a Contracting State shall be taxable only in that state in view of the clear and unambiguous terms of DTAA. (Emphasis Supplied) 15) Basis the above discussion, it can be concluded that the 'subject to tax' or 'liable to tax' will not have any bearing on the taxability of shipping income in the present case, as the taxing right vests only with the country of residence, in the present case it is Singapore. 16) The DR at Para E of his written submission has mentioned that the core issue on 'subjected to tax' was not adjudicated in the spirit of article 24 in the Appellants' own ITAT order for AY 2015-16. We submit that this is an incorrect statement. 17) It is pertinent to note that Article 24 has employed the phrase, subject to tax in respect of income which is received in Singapore . It is crucial to note that in the instant case, shipping income is taxable in Singapore on accrual basis as per Section 10(1) of Singapore Income Tax Act ('SITA') and it is not taxable on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Any assessments 2012-13 13-08-2014 142(1) No 2013-14 27-05-2014 139(4) No 2014-15 30-09-2014 139(1) No 2016-17* 30-09-2016 139(1) No 2017-18 27-10-2017 139(1) No *2 revised returns filed on 07-10-2016 and 06-09-2017 After survey notices u/s 148 of the IT Act dated 28-03-2019 were issued and served on the assessee. In response to the notice the appellant company filed return on 26-04- 2019. After disposal of objection filed by the appellant vide order dated 08-11-2019, the draft assessment orders were passed on 26-11-2019. This was upheld by DRP. The income of documentation chares and vessel handling charges admitted by agent BTL India is as under; Table-2 AY Documentation charges (in Rs) Vessel handling charges (in Rs) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences for the purpose of reopening and the related grounds of appeal cannot survive. 2. Analysis of Financials: Financials of the agent BTL India Ltd. for two assessment years i.e. 2012-13 and 2013-14 is placed in paper book from page no. 1 to 12. The agent's main source of income was agency commission earned from the principal. The other two incomes of documentation charges and vessel handling charges was booked incorrectly by the agent. 3. Note on business activity of the agents: Note on business activity submitted by the agent BTL India Ltd. to the assessing officer during the course of assessment carried out for the AY 2012-13 and 2013-14 is placed in page no. 13 to 21 of the paper book. It is clearly declared that BTL India Ltd provides agency support services to the shipping operation carried on by its group companies and it is remunerated by way of agency commission. They were not entitled to carry out any other activities independently other than the activities as per agreement. 4. Agency agreement: It is placed in paper book at page nos. 26 and 27. In clause 2 under General duties of agent it was clearly mentioned as under: - The Agent, through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant on 27-06-2019 to the AO for the AY 2012-13 placed at page no. 28 to 37. At point no. 3 it was clearly declared that in accordance with agency agreement, BTL India would include handling the principal's service, efficient dispatch of vessels, booking/documentation/accounting of containers on behalf of principal. 6.2 At point no. 4 of the same reply it was submitted that in Kolkata and Cochin port the agent had to take some additional services in the nature of documentation to facilitate efficient dispatch of vessels. 6.3 At point no. 5 of the same reply it was submitted that in Mangalore and Goa port the agent carried out vessel handling charges. 6.4 At point no. 6 of the same reply it was submitted that such documentation and vessel handling charges was mutually agreed between principal and agent and hence it was booked as revenue of agent BTL India Ltd. These incomes cannot be attributed to the appellant BTL Singapore. It is evident from these points that the agent cannot do such activities independently. They have done all the activities on behalf of principal. There was no separate agreement other than the agency agreement to show that the age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the payment from the customers, after meeting out the vessel related expenses by BTL India on behalf of Principal company, the balance surplus if any, will be repatriated to the Principal company. After 2017, customers made payment directly to Principal. 8.5 Having answered to these questions, the General Manager however replied to question no.23 that documentation charges and vessel handing charges is a local revenue. However, this cannot be acceptable. 8.6 Attention is drawn to answer to Q.no.7 given by Sri C. Ravi. He had admitted that as agent, we ask for pre-funding from the Principal to pay the port cost, terminal cost and any other cost related to the ships along with our agency commission. Thus, it is evident from all these documents that BTL India is only an agent entitled for commission income. When the company used the software of the Principal to prepare weekly and fortnightly statements of expenditure and got reimbursed the same from the Principal it cannot be accepted that they have independently carried out the business activities of vessel handling charges and documentation charges. This is what admitted by the appellant to the A.O in way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot independently book Documentation charge and vessel handling charges in their hands. There was no such agreement entered between agent and principal that allows agent to act independently. 3. The entire business activity of the agent was explained in the statement by the General Manager-Finance and Administration that the agent used to ask for prefunding from the Principal and spent those amounts towards various expenditure. For this purpose, they have used the software of the Principal company by generating weekly and fortnightly statements. 4. Various other activities incidental to earn commission income on freight viz. documentation and vessel handling were also carried out on behalf of Principal without any written agreement. This fact was admitted by the appellant at various instances discussed above. 5. The reply of the Director that this income was shown in agent's books of account for brief period is not correct. In all the relevant AY it was incorrectly shown in the accounts of the agent as against the accounts of the principal. 6. Hence, the reopening the assessment of principal, i.e. the appellant's case to assess the income escaped as docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15-16 has not considered the applicability of Article-24 and therefore, this decision could not be relied upon in all these years. The Ld. CIT-DR has filed written submissions along with copies of case laws and financial documents etc. to support the case of the revenue. 3.4 The Ld. CIT-DR drew attention to the financials of the Indian agent and submitted that the agent was acting as an exclusive agent for the assessee and the documentation and vessel handling charges received by it would belong to the principal entity only. Therefore, there was escapement of income in the hands of the assessee parent company. 3.5 The Ld. CIT-DR also drew attention to Article-24 of Indian- Singapore DTAA to submit that there is difference between the phrase subject to tax and liable to tax . The submissions were made that the shipping income of the assessee was exempt and not subject to tax under Singapore Taxation laws and therefore, Article-24 will apply to the case of the assessee. In such a case, the said income would be taxable in the hands of the assessee in India. The Ld. CIT-DR also advanced arguments to submit that documentation and vessel handling charges could not be held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) When income received in Singapore from outside Singapore In the present case, the issue is not on first two conditions. The third aspect of income accrued in India and not remitted to Singapore as well as not subject to tax in Singapore is the main focus of the assessment. Singapore has territorial basis of taxation where income accrued outside Singapore will be taxed once it is received in Singapore. This parameter is very crucial for deciding the issue in hand in line with Article-24 of DTAA. Because, the shipping income earned in India, not remitted to Singapore became the subject matter of assessment. AO also analysed the exemption provisions of section 13A of SITA and discussed at para-14 that it is not automatic and blanket exemption provided in SITA. The comptroller of SITA can assess the exemption akin to section 10A or 10AA or 80IA or 80IB of Indian Income tax. 4. Subject to tax and Article 24 of DTAA; With this background, the A.O examined Article 24 which deals with limitation of relief. The A.O also analysed the concept of subject to tax at paragraph 9. He has referred UK's HRMC International manual and concluded that subject to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Income Tax Act as well as DTAA. B. Appellant's grounds of appeal before Hon'ble ITAT: The appellants in the above cases have raised multiple grounds of appeal from 4.1 to 4.16 wherein they sought to rest their case on the decision of this honourable tribunal in the case of Ms Bengal Tiger Lines Pte Ltd in ITTPA No.ll/CHNY/2020 passed for the AY 2015-16. With due regards to the said decision of the Hon'ble members, the submission of the revenue is that the said decision does not espouses the correct position of law, for the elaborate reasons as stated below: The view expressed in the order of the Hon'ble Tribunal referred supra is that, the Article-8 is only an enabling provision for taxation of shipping income. Now to quote the Article-8 as per India Singapore treaty, the same reads as follows: ARTICLE 8 SHIPPING AND AIR TRANSPORT 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State., From the above it is seen that the enabling word giving exclusive right of taxation to the resident state viz., Singapore. The word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im to taxation. Hence the conclusion that Article-8 along with all the above provisions are both enabling provisions (in respect of resident state) as well exemption provisions (in respect of source state) is not correct. A plain reading of all the above articles goes on to prove that even though it is shall be taxable only in that state it can still come with certain riders thereby providing taxation rights to the source state as well. Article 8 being, both an enabling provision in respect of resident state and an exempt provision in respect of source state has a rider enabling the source state to tax shipping income as provided at Article 24 Limitation of Relief: C. Examination of Article-24 and conditions prescribed: ARTICLE24 LIMITATION OF RELIEF 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 13F of Singapore Income Tax Act, the second component that income should be subject to tax in the state of residence as mentioned in paragraph-C is not met. 6. Hence India has exclusive right to tax such income under domestic tax laws by virtue of Article 24 of the India Singapore DT AA. 7. India Singapore DTAA is unique for the reason that Article 24 specifically discusses about Limitation of Relief This article talks about limitation given in the DTAA. This article insists on subject to tax as against other DTAAs wherein the mandate is only on liable to tax' and therefore there is a clear distinction between liable to tax and subject to tax. D. Analysis of Shipping Income in other DTAA: Government of India had entered into DT AA with nearly 135 countries. Around 20 of such DTAA are analysed and enclosed as annexure-l . In all the DTAA, Article-8 is on taxation of shipping and air transport income . This is common in many of the agreements where the right of taxation of shipping income has been given to the resident state. It is applicable to India- Singapore DTAA also. Article 24 in many of the agreements discussed about Eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to our notice that there are two judgements or this issue viz., one form ITAT Ahmedabad and the other is from ITAT Chennai. The ITAT Chennai has taken a view in favour of the assessee in the light of India-Singapore DTAA and ITAT Ahmedabad, although, in principle agreed that the assessee is entitled for DTAA benefit, but expressed its reservations on subject to tax and liable to tax in the light of Article 25(4) of India-Singapore DTAA. Therefore, we are of the considered opinion that these appeals are required detailed hearing on the issue of subjected to tax and liable to tax. Therefore, these appeals are treated as de-heard and released for fresh hearing. The Registry is directed to post the appeal, for hearing on regular course. Both parties informed in the open court. [alw IT(TP)A 1-Chny/2020 IT (TP) A 59/Chny/2019] The copy of the order sheet is enclosed as annexure-2 . It is evident from the order sheet of Hon'ble ITAT that the decision of Bengal Tiger rendered for the A.Y.2015- 16 did not lay down the position of law correctly. Exactly this is what Hon'ble Madras High court observed when it was deciding the case of CIT Vs Hi tech Arai Limited in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As Chennai ITAT itself later accepted that the liable to tax and subject to tax was not examined in the earlier decision and released the appeal of other cases namely Pacific International Lines Pte Ltd and Advanced Container Lines Pte Ltd for fresh hearing, the decision of Maersk tankers is not acceptable. Summary and Prayer: 1. In the earlier decision of Bengal tiger lines in IT(TP)A No:11/CHNY/2020, Hon'ble ITAT, Chennai has not appreciated the fine issue of Subject to tax as provided in Article-24. While releasing the appeals of Pacific International Lines Pte Ltd and Advanced Container Lines Pte Ltd, this fact was duly recorded by Hon'ble ITAT vide order sheet dated 08-06-2022. 2. Article-8 is not a special article only to Singapore DTAA. It is common in all the DTAA. It talks about taxation of shipping income and air transport income. As per this article, the resident country has exclusive right of taxation (liable to tax). Whatever income arise or accrue in Singapore, then it is liable to be taxed in Singapore and subsequently exempt from taxation as per section 13A or F of SITA. 3. Singapore follows territorial basis of taxatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld reveal that the assessee-company is engaged in shipping business. The assessee is incorporated in Singapore and filed its return of income on 13-08-2014 declaring Nil income after claiming benefit of Article-8 of the India-Singapore DTAA. However, a survey u/s.133A(2A) of the Act was carried out at the premises of its Indian subsidiary entity i.e., M/s. Bengal Tiger India Pvt. Ltd. (BTIPL) on 07-03-2019. 5.2 Based on the findings of survey operations, the assessee s case was reopened u/s. 147 of the Act with due approvals and notice u/s 148 was issued on 28-03-2019. The assessee sought reasons for reopening which were duly communicated to the assessee. The assessee s objections thereto were also disposed-off by Ld. AO. The copy of the reasons recorded has already been placed on record and we have gone through the same. Subsequently, notices u/s. 143(2) and 142(1) were issued calling for requisite details from the assessee. Based on assessee s submissions, the assessment was framed by Ld. AO. 5.3 The survey proceedings revealed that M/s. BTIPL was the agent of the assessee in India. It was collecting documentation and vessel handling charges (DVHC) allegedly on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be taxable only in that state. Since the assessee was resident of Singapore, it took a view that the entire income from its shipping business would be taxable only in Singapore. However, the purpose of DTAA was to avoid double taxation of the income. The assessee argued that only Singapore would have a right to tax the shipping income. The country of residence of a shipping company would have exclusive right to tax the income from shipping operation. The DTAA seek to prevent a situation where both the signatory countries lay claim to taxation rights on the same income. In such a scenario, DTAA would come into picture only to clarify as to which country would have first right of taxation. In other words, in a situation where both India and Singapore are laying claim to taxation rights on the shipping income of the assessee company, then in that case the country of residence will have the exclusive right of taxation and the shipping income in the source state would be exempt from taxation. However, in a situation where the country of residence i.e., Singapore itself was not taxing the income then the question of double taxation would not arise in the first place and the other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation to Sec.44B and would be chargeable to tax separately. These charges were for payment of custom clearances and declaring the vessels at port and were being collected as per trade practices. The charges were for handling, facilitating port clearances and to assist in local marketing activities and nothing to do with the shipping activity. The same were separately billed and considered as distinct and could not be considered as ancillary activities. 5.9 The Ld. AO also held that even if the benefit of Article-8 was to be allowed, the same would be restricted by the clauses enumerated in Article-24. M/s BTIPL was remitting only the balance amount to its principal. It was receiving freight and related charges on behalf of the assessee and it was debiting vessel and cargo related expenses including commission. It was remitting only the balance amount. The amount which is not remitted would not get benefit of Article-8 and accordingly, to be taxed u/s 44B. 5.10 Finally, the income on freight revenue earned by the assessee in India was computed u/s 44B at Rs.1089.70 Lacs and added to its income. The assessee received documentation charges of Rs.139.69 Lacs and vessel handli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pore Tax Authority i.e., Inland Revenue Authority of Singapore (IRAS) clarifying that the shipping income for a Singaporean company is taxable in Singapore on accrual basis and not on receipt basis and therefore, one of the conditions of Article-24 that the income in that other contracting state should be taxable on receipt basis was not fulfilled. Further, the provisions of Sec.13F of Singapore Income Tax were already in existence since the year 1991 i.e., much before signing of DTAA. The competent authorities were fully aware of such a provision and still chose to grant the taxing right only to the country of residence. The assessee also furnished additional evidences which were in the shape of DIT relief certificates issued u/s 172, Tax Residency Certificates (TRC) issued by IRAS, return of income filed by the assessee in Singapore and break up of freight income earned in India. The assessee also relied on various judicial pronouncements to support its case. 6.3 However, Ld. DRP maintained that the term exempt from tax was not defined in tax treaty. The purpose of Limitation of Benefit Article-24 was to limit the abuse of treaty benefits. If an income is to be granted an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities against specified percentage of commission on all inbound and outbound FIO freight. The agent was to carry out such duties customarily expected of Agents or perform under specific instructions from the Principal. Such duties include marketing and handling of Principal's services, the efficient dispatch of vessels, and the booking, documentation and accounting of containers. The agent performs feeder agency functions in India in accordance with the instructions of the principal. All expenses relating to the agency function, including local taxes, are to be borne by the agent only. The agent was to carry out the functions as an agent only and was not to compete with the Principal's services nor represent or participate directly or indirectly with competitive companies of any kind. For these services, the agent was to be remunerated at certain percentage of FIO freight. Further, the assessee was required to place the funds in advance with the agent to meet all expenses relating to the vessels and to carry out their operations and to meet related expenditure. It could thus be seen that the agent act to facilitate shipping operation of the assessee principal in India. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o question no.5, it was submitted that the agent perform vessel handling facilitates port clearance and assists in local marketing activities, raises invoices on behalf of the principal and ensure collection of freight. The agent is responsible for submission of accounts regarding expenses of principal and balancing the same with freight and direct remittances. In reply to question nos.12 13, it was confirmed that the documentation charges were levied for the local work undertaken by BTIPL for shipping lines. These functions were stated to be performed completely by the agent and not performed on behalf of the principal. The same was stated to be performed as per local trade requirements. The charges were stated to be treated as income of the agent and considering the same to be the income of principal would amount to double taxation. In reply to question nos.15 16, it was similarly confirmed that stevedore was appointed by the agent for handling of vessels which was charged and offered to tax by the agent. The service was stated to be local value added service being provided to stevedore and the income thus arising from such activity was said to be belonging to agent only and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reasons of escapement of income as under: - From the above invoices and sworn statements recorded from relevant personnel regarding the documentation charges, it is found that the above said charges was collected by M/s. Bengal Tiger Line India Private Limited for issuing No Objection Certificate, for clearing containers out of Kolkata docks and late gate-in permission extended to customers at Cochin terminal. Since, the said documentation charge was collected by M/s. Bengal Tiger Line India Private Limited on behalf of Bengal Tiger Line Pte Singapore, the income collected out of documentation charge should be taxed in the hands of M/s. Bengal Tiger Line Pte Ltd at the rate of 40 percent as income accrued / arised in India, though the income earned from the documentation charges is declared in the financials of M/s. Bengal tiger India Private Limited. From the available records, it is believed that the income earned out of documentation charge of Rs.1,39,69,520/- which was chargeable to tax has escaped the assessment for the relevant AY 2012-13. .. .. B. Vessel handling Charges: From the above invoices and sworn statements recorded from relevant personnel r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. In fact, there is no tangible material before Ld. AO to reach such a conclusion and the conclusion is merely based on the opinion of the AO that certain income should be taxable in the hands of one person instead of another person. 11. In our considered opinion, one of the primary essential conditions to reopen the assessment are that Ld. AO has reasons to believe that certain income has escaped assessment in the hands of the assessee. The fact of escapement of income is sine qua non to acquire this jurisdiction. Until and unless there is escapement of income, the reopening could not be resorted to under law. We find that in the present case, there are no reasons before Ld. AO to reach such a belief that documentation / vessel handling charges belonged to the assessee and the agent wrongly offered the same to tax. Secondly, there is no escapement of income since the income has already been offered to tax by the agent. Merely because tax rate was higher for principal, the same could not lead to a conclusion that there was escapement of income unless it was conclusively shown that the income of the principal was erroneously offered to tax by the agent. We find that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion of escapement of income. All these case laws support the case of the assessee. Considering the same, we would hold that the reassessment proceedings, for all the years, are bad-in-law and thus, liable to be quashed. 13. Since the reasons of formation of belief of escapement of income fails, consequently, the assessment of Shipping freight income, as done by Ld. AO, would be unsustainable in terms of the decision of Hon ble Delhi High Court in Ranbaxy Laboratories Ltd. (12 Taxmann.com 74); the decision of Hon ble Bombay High Court in Jet Airways (I) Ltd. (195 Taxman 117); the decision of Hon ble Delhi High Court in Blackstone Capital Partners (Singapore) Vi FDI Three Pte. Ltd. (146 Taxmann.com 569). In the case law of Ranbaxy Laboratories Ltd. (supra), it was held that the legislature could not be presumed to have intended to give blanket powers to Assessing Officer that on assuming jurisdiction u/s 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with reasons to believe, on the basis of which he assumed jurisdiction. Therefore, for every new issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, this argument run contrary to CBDT Circular No.30/2016 dated 26-08-2016 which clarifies that this certificate is to be issued only after examining the applicability of DTAA to the foreign shipping company. Therefore, this argument cannot be accepted. The relevant extract of the circular is as under: - 6. Circular No.732 dt. 20.12.1995 provides for issue of Annual NOC (i.e., DIT relief certificate) by AO after carefully verifying the applicability of the DTAA. Annual NOC is to be issued in cases where no tax is leviable on foreign shipping company due to the DTAA. The AO before whom the request for Annual NOC is filed by the foreign shipping company should accordingly examine the applicability of DTAA to the foreign shipping company before issue of annual NOC. In the light of clear instructions by the Board, the certificate as issued to the assessee could not be considered to be a mere provisional certificate. 16. Finally, in the backdrop of our aforesaid findings and conclusions, it was to be held that the reassessment proceedings as well as consequential assessment framed therein are unsustainable in law and accordingly, liable to be quashed. We order so. The corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent sources of income as agreed upon by both the countries. However, it is nowhere a condition that such income should necessarily be taxed in the state having jurisdiction to tax such an income. These articles merely allocate taxing rights between the two countries. The income may or may not be actually taxed by that jurisdiction. 19. The relevant Article 8, which is the subject matter of present appeals, read as under: - ARTICLE 8 SHIPPING AND AIR TRANSPORT 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State., A bare reading of the above Article would show that the exclusive right of taxation of profits derived by an enterprise of a contracting state from the operation of ships and aircraft in international traffic has been given to the contracting state only. In other words, in the present case, profit of Singapore Entity operating the shipping activities would be taxable only in Singapore to the exclusion of India. Conversely, profit of Indian entity operating the stated activities in international traffic would be taxable in India only. Thus, the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. As already noted, Article 8 vests taxation right of shipping income to the Singapore Authority and the same do not provide for any exemption or reduced rate of taxation to the assessee. Therefore, the second condition is not satisfied in the present case. The third condition is that the income of non-resident should be taxed on receipt basis in Singapore. 21. During the course of proceedings before lower authorities, the assessee placed on record the letter dated 17.02.2016 issued by The Inland Revenue Authority of Singapore (IRAS) which has clarified that the income of a Singaporean Company from the operation of ships in international traffic would be taxable in Singapore on accrual basis. The same has been placed on page nos. 54 to 56 of the paper book. In letter dated 17.02.2016, it has been stated as under: - Based on the information available, we confirm that the freight income will be regarded as Singapore Sourced income and will be brought to tax on accrual basis (i.e., not remittance basis) The same has further been clarified in letter dated 17.09.2018 as under: 5. We regard shipping enterprises operating in Singapore as carrying on business operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line of agreement was that DTAA do not provide for double non-taxation of the income. However, we find that the provisions of Sec. 13F of the Singapore Income Tax Act were already in existence since 01-04-1991 whereas DTAA between the two countries has been signed subsequently on 27-5-1994. Despite that, both the authorities chose not to alter the taxation right of shipping income which is generally available to the country of residence. The DTAA is in the nature of bilateral agreement wherein the two countries have specifically agreed on the taxing rights of particular streams of income. The same has to be given effect to in full, whatever the consequences may be. 24. At this juncture, it would be useful to quote the decision of Hon ble Gujarat High Court in the case of M.T. Maresk Mikage vs. DIT (72 Taxmann.com 359) as referred to by Ld. AR. Upon study, we find that this decision has been rendered on similar factual matrix. In this case, one Singapore based entity by the name ST Shipping and Transport Private Limited undertook voyages from various Indian ports and earned income which was claimed exempt in terms of Article 8 of Double Taxation Avoidance Agreement ('DTAA& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al carried the matter before the Tribunal. The Tribunal allowed the appeal on the ground that Article 24 of DTAA was wrongly applied by the Revenue authorities. Department has not filed appeal against such judgment of the Tribunal. III. Counsel submitted that even if such income is exempt from tax under the income-tax law in Singapore, the same cannot 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. Asstt. DIT [2012] 349 ITR 493/211 Taxman 82/23 taxmann.com 400 (Delhi) and of the Supreme Court in case of Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706/132 Taxman 373. 12. On the other hand, learned counsel Shri Nitin Mehta for the department opposed the petition contending; I. The revision petition before the Commissioner was not maintainable. The petitioner having first filed appeal before the appellate Commissioner, could not have thereafter filed the revision petition. II. The Department's interpretation of Clause-24 of the DTAA is correct. In the present case, admittedly, the income had not been remitted to Singapore. By virtue of Clause (1) of Article 24 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntracting State. In plain terms therefore, if the income in question was taxable in Singapore on the basis of receipt or remission and not by reference to the full amount of income accruing, clause (1) of Article 24 would apply and dependent on the facts of the case, exemption as per 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 the full amount of income would be assessable to tax in Singapore not by reference to the amount remitted to or received in Singapore. In fact, the certifying authority went on to opine that in view of such facts, Article 24(1) of the DTAA would not be applicable and consequently, Article 8 would apply. 18. To this later opinion of the Revenue authority of Singapore, we may not be fully guided since it falls wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 the amount remitted to, or received in, the other contracting state, rather than with reference to full amount of such income; and (iii) in such a situation, the treaty protection will be restricted to the amount which is taxed in that other contracting state. In simple words, the benefit of treaty protection is restricted to the amount of 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 other approach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e raised for the first time before us by the Revenue, for which, neither full factual evidence, nor legal foundation is laid. We leave such an issue open to be decided in the appropriate case. 23. In the result, petition is allowed. Impugned order dated 25.03.2014 passed by the Commissioner is set aside. Resultantly, order of assessment dated 26.12.2011 is also quashed. Petition disposed of accordingly. We find that the aforesaid decision squarely applies to the fact of the present case. The Hon ble Court, relying upon certificate of Revenue Authority of Singapore, noted that full income would be assessable in Singapore on accrual basis. In the absence of any rebuttal material produced by the Revenue, the factual declaration made by the said authority was to be accepted. Further, the genuineness of the certificate was not doubted. We find that similar facts exist before us and the ratio of this case law squarely applies to the facts of present case. The revenue s argument that the certificate was opposed to the provisions of Section 10 of the Singapore Income Tax Act was not accepted by Hon ble Court. The Hon ble Court also referred to the decision of Hon ble Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of ships in international waters is taxable only in Singapore on accrual basis. Similarly, Article 24 of India-Singapore DTAA limits the relief on the basis of income from sources in a Contracting State is 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 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. From the combined reading of Articles 8 and 24 of India-Singapore DTAA, it is very clear that article 8 provides exclusive right of taxation to country of residence, i.e. Singapore on accrual basis. Similarly, article 24 limits the exemption, in case income is exempt or taxed at reduced rate in source country, i.e. in India and further such income is taxable in country of residence on receipt basis. The AO, referring to Article 24 of the tax treaty, was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the taxability of particular income in other Contracting State. From the reading of Article 8, which clearly envisages derivable or jurisdictional rights for taxing the income and as per which India has no jurisdiction for taxing any income which are covered by Article 8. Therefore, we are of the considered view that international shipping income of a non-resident of a Contracting State is taxable only in that state and in this case, the assessee being tax resident of Singapore, shipping income earned from India on international waters is taxable only at Singapore on accrual basis. 15. Having said so, let us examine the applicability of Article 24 of India-Singapore DTAA. Article 24 of India-Singapore DTAA contemplates twin conditions for its applicability. The first condition is that income sourced in a Contracting State and such income should be exempt or taxed at a reduced rate by virtue of any article under the India-Singapore DTAA. As we noted earlier Article 8 of India-Singapore DTAA does not provide for exemption or reduced rate of taxation of such income. It is crucial to note that Article 8 of India-Singapore DTAA contemplates the taxation rights of a particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrual, clause (1) of Article 24 of Indo-Singapore DTAA would not apply to deny benefit of Article 8 of Indo-Singapore DTAA to said company. The Hon'ble High Court while considering the issue has analyzed the provisions of Article 8 vis-a-vis Article 24 of DTAA and after considering relevant facts, the court held 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. The court further held that 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. The Hon'ble court while arriving at the above conclusion has taken support from the letter issued by Singapore Revenue Authority clarifying the taxation position of global shipping income of tax resident of Singapore and held that when shipping income of a tax resident of Singapore was taxable at Singapore on the basis of accrual, the very basis of applying Article 24 would not survive. This issue was further considered by the Mumbai Bench of ITAT in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy in existence since 1-4- 1991 and as such the articles provided in India-Singapore DTAA which was came into existence from 27-5-1994 was inserted by the Competent Authorities of both the Contracting States after thoroughly considering the provisions of Section 13F of Singapore Income Tax Act and further choose not to alter the taxation right of shipping income which is generally available to the country of residence. We further noted that two sovereign nations have entered into a bilateral agreement and specifically agreed on the taxing rights of particular streams of income, the provisions of such agreement should be merely given effect to and as such the action of the AO to claim taxing right over the said income which is not provided in the treaty is ultra vires the power of the AO and will amount to dishonouring the bilateral agreement between two sovereign nations. We further noted that the AO has taken support from 10(1) of Singapore Income Tax Act to argue that any income of a Singaporean resident that is accrued or received in Singapore is chargeable to tax in Singapore at the specified income tax rates. But, fact remains is that although profits derived by an internation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd purpose. However it may be noted that Article 31(2) of Vienna Convention does not cover object and purpose. Therefore, we are of the considered view that AO has misunderstood the general rules of interpretation in the Vienna Convention. Even assuming without conceding that the preamble should be referred to understand the object and purpose, the stated objective of the treaty is avoidance of double taxation . This object can be achieved in two ways, which one way by credit mechanism when both the countries tax the same income and the second way is providing 'exclusive right of taxation' to one country and thereby double taxation can be avoided. In the present case, Article 8 provides exclusive right of taxation of shipping income to Singapore in order to avoid double taxation method where India has given up its right of taxation of international shipping income of a Singaporean resident and as such Singapore has reserved its exclusive right to tax the same. Once the country of resident is having exclusive rights to tax a particular income by way of separate Article, then limiting or denying such benefit by interpreting the other Articles which are provided for limiting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td of United Kingdom and also considered Circular No. 333 issued by CBDT and held that in the DTAA between India and Cyprus and India and U.K the provisions relating to taxation of shipping business are pari materia. Therefore, the income earned by the assessee from shipping operations in India is taxable only at Contracting State (country of residence). The relevant findings of the Tribunal are as under: 7. We have heard the submissions made by both the parties. We have perused the order of the Assessing Officer and the directions of the DRP and also the judgments relied on by the AR. In the present case it is not in dispute that the assessee/appellant is a foreign company and has its effective management in Cyprus. The AR has placed on record a copy of DTAA between India and Cyprus. A perusal of Article 7 of the DTAA shows that Article 7 relates to business 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-tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring facts and circumstances of this case, we are of the considered view that Article 8 of India-Singapore DTAA is applicable and as per which shipping income of a resident of Singapore is taxable only in Singapore but not in India. The AO has made an attempt to deny the benefit of exemption claimed by the assessee by invoking Article 24 of India-Singapore DTAA, even though, the conditions stipulated under Article 24 are not satisfied. We, therefore are of the considered view that the AO as well as the Ld.DRP were erred in coming to the conclusion that income earned by the assessee from shipping operations in India is taxable in India by virtue of Article 24 of India-Singapore DTAA. Hence, we direct the Assessing Officer to delete the additions made towards shipping income of assessee earned in India. 21. In the result, the appeal of the assessee is allowed. In the aforesaid decision, the bench has observed that the assessee is tax resident of Singapore and do not have any permanent establishment (PE) in India. As per Article-8 of India-Singapore DTAA, the profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicability of Article-24 and also considered the communication received from IRAS and finally held that Article-24 would not apply. To support the same, the decision of Hon ble Gujarat High Court in M.T. Maersk Mikage (supra) was also considered wherein the Hon'ble court held that where income earned by Singapore based shipping company through shipping business carried out at Indian Ports was not taxable at Singapore on the basis of remittance but on basis of accrual then clause (1) of Article 24 of India- Singapore DTAA would not apply to deny benefit of Article-8. Similar was stated to be the decision of Mumbai Tribunal in APL Co. Pte. Ltd. (supra) as well as the decision of Hyderabad Tribunal in Far Shipping (Singapore) Pte. Ltd. (supra). The bench further observed that the provisions of Section 13F of the Singapore Income Tax Act was already in existence since 1-4-1991 and as such the articles provided in India-Singapore DTAA which came into existence from 27-5-1994 was inserted by the Competent Authorities of both the Contracting States after thoroughly considering the provisions of Section 13F of Singapore Income Tax Act and further choose not to alter the taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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