Far Shipping Singapore Pte Limited- Rep. by Samsara Shipping (P) Ltd, Mumbai, Mumbai V. ITO, International Taxation, Nellore, Nellore

ITA 429/HYD/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2405 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 07-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Additional evidence; Competent authority
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. AY. APPELLANT RESPONDENT 399/HYD/17 2014-15 M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., SINGAPORE REPRESENTED BY M/S. SAMSARA SHIPPING (P) LTD MUMBAI [PAN: AABCF4439N] THE INCOME TAX OFFICER (INTERNATIONAL TAXATION), NELLORE 400/HYD/17 2014-15 401/HYD/17 2014-15 402/HYD/17 2014-15 403/HYD/17 2014-15 404/HYD/17 2014-15 405/HYD/17 2014-15 406/HYD/17 2014-15 407/HYD/17 2014-15 408/HYD/17 2014-15 409/HYD/17 2014-15 410/HYD/17 2014-15 411/HYD/17 2014-15 412/HYD/17 2014-15 413/HYD/17 2014-15 414/HYD/17 2014-15 415/HYD/17 2014-15 416/HYD/17 2014-15 417/HYD/17 2014-15 418/HYD/17 2014-15 419/HYD/17 2014-15 420/HYD/17 2014-15 421/HYD/17 2014-15 422/HYD/17 2014-15 423/HYD/17 2014-15 424/HYD/17 2014-15 425/HYD/17 2014-15 426/HYD/17 2014-15 427/HYD/17 2014-15 428/HYD/17 2014-15 429/HYD/17 2014-15 430/HYD/17 2014-15 431/HYD/17 2014-15 432/HYD/17 2014-15 433/HYD/17 2014-15 434/HYD/17 2014-15 435/HYD/17 2014-15 436/HYD/17 2014-15 FOR ASSESSEE : SHRI I. KAMASASTRY, AR FOR REVENUE : S HRI L. RAMJI RAO , DR DATE OF HEARING : 1 5 - 0 6 - 201 7 DATE OF PRONOUNCEMENT : 16 - 0 6 - 201 7 M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 2 - : O R D E R THESE BATCH OF APPEALS PERTAIN TO 38 VOYAGES U NDERTAKEN BY M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., SINGAPORE F ROM KRISHNA PATNAM PORT. 2. INITIALLY, WHEN THE SHIP WAS BEING SAILED OUT OF TH E PORT, A PORT CLEARANCE CERTIFICATE WAS ISSUED, WITHOUT DEMANDING ANY TAX BUT ON THE ASSURANCE OF THE AGENT TO FILE THE RETURNS WITH IN THIRTY DAYS. ASSESSEE IS REPRESENTED BY M/S. SAMSARA SHIP PING (P) LTD., MUMBAI, WHO FILED SEPARATE RETURNS FOR EACH OF THE V OYAGES U/S. 172(3) OF THE INCOME TAX ACT [ACT], SEEKING BENEFIT OF ARTICLE 8 OF THE DOUBLE TAXATION TREATY BETWEEN INDIA AND SINGAPOR E. THE ASSESSING OFFICER (AO) INVOKED THE PROVISIONS OF ARTI CLE 24(1) I.E., LIMITATION OF BENEFITS CLAUSE OF THE DTAA, ON THE REAS ON THAT ASSESSEE HAS NOT SUBSTANTIATED THE REMITTANCE OF MONEY TO SINGAPORE IN ALL THE VOYAGES. ACCORDINGLY, HE DEMAN DED TAX ON THE AMOUNT RECEIVED FOR EACH VOYAGE U/S. 172(4) OF THE AC T. AGGRIEVED BY THE SEPARATE ORDERS OF THE AO, ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A) AND FURNISHED THE ADDITIONAL EVIDENCE IN THE FORM OF CERTIFICATE FROM THE INLAND REVENUE AUTHORITY OF SINGAP ORE THAT THE AMOUNT HAS BEEN CONSIDERED FOR TAX ON ACCRUAL BASIS. ASSESSEE ALSO FURNISHED VARIOUS DETAILS OF BANK ACCOUNTS AND R EMITTANCES AND ALSO CERTIFICATE FROM THE AUDITOR OF ASSESSEE-COMPA NY THAT THE AMOUNTS/INVOICES PERTAINING TO THE VOYAGES HAVE BEEN TAKEN INTO ACCOUNT. THE AO HOWEVER, IN THE REMAND PROCEEDINGS D ID NOT ACCEPT STATING THAT ASSESSEE HAS NOT FURNISHED VOYAGE WIS E REMITTANCE TO VERIFY THE AMOUNT OF REMITTANCE, ACCORDINGL Y, REPORTED TO THE CIT(A) THAT ASSESSEE HAS NOT SUBSTANTIATED THE M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 3 - : REMITTANCE OF THE MONEY. LD.CIT(A) NOT ONLY REJECTED TH E CERTIFICATE OF THE INLAND REVENUE AUTHORITY OF SINGAPORE ON THE R EASON THAT ASSESSEE DID NOT SUBSTANTIATE THE REMITTANCES BUT ALSO REJE CTED THE ADDITIONAL EVIDENCE AND CONFIRMED THE ORDERS OF THE A O. ASSESSEE IS AGGRIEVED. 3. LD. COUNSEL FOR ASSESSEE RELIED ON THE CERTIFICATE ISSUED BY THE INLAND REVENUE AUTHORITY OF SINGAPORE, PLACED AT P G. 31 OF THE PAPER BOOK, ALONG WITH THE DECISIONS OF HON'BLE GUJA RAT HIGH COURT AND DELHI HIGH COURT ON THE ISSUE WHETHER ARTICLE 24 WILL APPLY WHEN ARTICLE 8 OF THE DTAA EMPOWERS THE OTHER CONTRACTIN G STATE TO TAX THE RELEVANT INCOME. HE ALSO RELIED ON THE CO-ORDI NATE BENCH DECISIONS WHICH ARE DISCUSSED LATER ON IN THE BODY O F THE ORDER. HE ALSO PLACED ON RECORD THE JUDGMENT OF THE HON'BLE MADR AS HIGH COURT IN THE CASE OF CIT VS. LAKSHMI TEXTILE EXPORTERS LTD., [245 ITR 521] TO SUBMIT THAT CERTIFICATE ISSUED BY THE OTHER CONTRACTING STATES AUTHORITY SHOULD NOT BE DISBELIEVED WITHOUT ANY VALID REASON. 4. LD.DR, HOWEVER, REFERRED TO THE ORDERS OF THE AO AN D CIT(A) TO SUBMIT THAT ASSESSEE HAS NOT SUBSTANTIATED THE REMITTANCE OF THE AMOUNTS TO SINGAPORE AND THEREFORE, ARTICLE 24(1) W ILL CERTAINLY APPLY LIMITING THE BENEFIT. HE RELIED ON THE ORDERS OF THE AUTHORITIES. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE CONSIDERING THE ISSUE WHETHER THE LIMI TATION CLAUSE AS APPEARING IN ARTICLE 24 OF INDIA SINGAPORE DTAA IS APPLICABLE TO THE FACTS OF THE PRESENT CASE OR NOT, IT WOULD BE RELE VANT TO M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 4 - : EXTRACT THE ARTICLE ITSELF, WHICH FOR THE SAKE OF READY REFERENCE IS REPRODUCED AS UNDER: ARTICLE 24: LIMITATION OF RELIEF 1. WHERE THIS AGREEMENT PROVIDES (WITH OR WITHOUT O THER CONDITIONS) THAT INCOME FROM SOURCES IN A CONTRACTING STATE SHALL BE EXEMPT FROM TAX, OR TAXED AT A REDUCED RATE IN THAT CONTRACTING STATE A ND UNDER THE LAWS IN FORCE IN THE OTHER CONTRACTING STATE THE SAID INCOM E IS SUBJECT TO TAX BY REFERENCE TO THE AMOUNT THEREOF WHICH IS REMITTED T O 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 ALLOWE D UNDER THIS AGREEMENT IN THE FIRST-MENTIONED CONTRACTING STATE SHALL APPL Y 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 INCOM E DERIVED BY THE GOVERNMENT OF A CONTRACTING STATE OR ANY PERSON APP ROVED BY THE COMPETENT AUTHORITY OF THAT STATE FOR THE PURPOSE O F THIS PARAGRAPH. THE TERM 'GOVERNMENT' INCLUDES ITS AGENCIES AND STATUTO RY BODIES.' 5.1. THE AFORESAID ARTICLE PROVIDES A LIMITATION OF R ELIEF RELATING TO REMITTANCE BASIS OF TAXATION WHICH IS IN FEW COUNTRIES L IKE SINGAPORE AND UNITED KINGDOM. HOWEVER, WHETHER THIS LIMITATION CLAUSE WILL APPLY TO THE DTAA, SO AS TO OUST THE PROVIS IONS OF ARTICLE 8 HAS BEEN CONSIDERED BY THE HON'BLE GUJARAT HIGH COU RT ANALYSING INDIA SINGAPORE DTAA AND THAT TOO, IN THE C ASE OF A SHIPPING COMPANY M.T. MAERSK MIKAGE & ORS. VS. DIT( IT) REPORTED IN 291 CTR 184 (GUJ). THE RELEVANT OBSERVATION OF TH E HON'BLE HIGH COURT IS REPRODUCED AS UNDER: 15. THIS BRINGS US TO THE CORE ISSUE STRENUOUSLY D EBATED 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 COM PANY BASED IN SINGAPORE. THROUGH THE SHIPPING BUSINESS CARRIED OU T AT INDIAN PORTS, ST SHIPPING EARNED INCOME, ON WHICH, IT CLAIMS IMMUNIT Y FROM INDIAN INCOME TAX. THE REVENUE CONTENDS THAT THE REMITTANCE OF SU CH ACCRUED INCOME NOT HAVING TAKEN PLACE AT SINGAPORE, ARTICLE 24 WILL AP PLY AND CONSEQUENTLY ARTICLE 8 PROVIDING FOR AVOIDANCE OF TABLE TAXATION WOULD NOT APPLY. 16. THE FACT, THAT THE INCOME IN QUESTION WHICH ARI SES OUT OF SHIPPING OPERATIONS BY VIRTUE OF CLAUSE- 1 OF ARTICLE 8 OF T HE DTAA WOULD BE TAXABLE M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 5 - : ONLY IN SINGAPORE, IS NOT IN SERIOUS DISPUTE. THE M OOT 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 INCOM E FROM SOURCES IN CONTRACTING STATES (IN THE PRESENT CASE, INDIA) SHA LL BE EXEMPT FROM TAX OR TAX AT A REDUCED RATE AND UNDER THE LAWS IN FORCE I N OTHER CONTRACTING STATES (I.E. SINGAPORE), SUCH INCOME IS SUBJECT TO TAX BY REFERENCE TO THE AMOUNT THEREOF WHICH IS REMITTED OR RECEIVED IN THA T STATE AND NOT BY REFERENCE TO THE FULL AMOUNT THEREOF THEN THE EXEMP TION OR REDUCTION OF TAX UNDER THE AGREEMENT WOULD BE LIMITED TO SO MUCH OF THE INCOME AS IS REMITTED TO OR RECEIVED IN THAT CONTRACTING 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 O F 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 PA RT WOULD BE EXCLUDED. 17. IT IS, IN THIS CONTEXT, THAT THE CERTIFICATE DA TED 09.01.2013 ISSUED BY THE INLAND REVENUE AUTHORITY OF SINGAPORE ASSUMES S IGNIFICANCE. IN THE SAID CERTIFICATE, AS NOTED, IT WAS CERTIFIED THAT T HE INCOME IN QUESTION DERIVED BY ST SHIPPING WOULD BE CONSIDERED AS INCOM E ACCRUING IN OR DERIVED FROM THE BUSINESS CARRIED ON IN SINGAPORE A ND SUCH INCOME THEREFORE, WOULD BE ASSESSABLE IN SINGAPORE ON ACCR UAL BASIS. IT WAS ELABORATED THAT THE FULL AMOUNT OF INCOME WOULD BE ASSESSABLE TO TAX IN SINGAPORE NOT BY REFERENCE TO THE AMOUNT REMITTED T O OR RECEIVED IN SINGAPORE. IN FACT, THE CERTIFYING AUTHORITY WENT O N TO OPINE THAT IN VIEW OF SUCH FACTS, ARTICLE 24.1 OF THE DTAA WOULD NOT BE A PPLICABLE 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 WITHIN THE REALM OF INTERPRETATION OF THE RELEVANT CLAUSES OF DTAA. HOWEVER, IN ABSENCE OF AN Y REBUTTAL MATERIAL PRODUCED BY THE REVENUE, WE WOULD CERTAINLY BE GUID ED 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 C ARRIED 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 CE RTIFICATE WAS BEFORE THE COMMISSIONER WHILE HE PASSED THE IMPUGNED ORDER. TH E CONTENTS OF THIS CERTIFICATE WERE NOT DOUBTED. IF THAT BE SO, WHAT E MERGES FROM THE RECORD IS THAT THE INCOME IN QUESTION WOULD BE ASSESSABLE TO TAX AT 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 IN VOKING ARTICLE 24.1 OF DTAA AN INTERPRETATION WHICH ACCORDING TO US DOES N OT 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 B ASIS OF ACCRUAL, BUT ON M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 6 - : THE BASIS OF REMITTANCE, APPLICABILITY OF ARTICLE 8 WOULD BE OUSTED TO THE EXTENT SUCH INCOME IS NOT REMITTED. THIS CLAUSE DOE S NOT PROVIDE THAT IN EVERY CASE OF NON-REMITTANCE OF INCOME TO THE CONTR ACTING 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 QUE STION 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 WOUL D NOT SURVIVE. THE CONTENTION OF SHRI MEHTA FOR REVENUE THAT THE CERTI FICATE OF THE SINGAPORE REVENUE AUTHORITIES IS OPPOSED TO PROVISIONS OF SEC TION 10 OF THE SINGAPORE INCOME TAX ACT ALSO CANNOT BE ACCEPTED. THE REVENUE DOES NOT QUESTION GENUINENESS OF THE CERTIFICATE. IT CANNOT DISPUTE T HE CONTENTION ON THE GROUND THAT THE SAME ARE OPPOSED TO THE STATUTORY P ROVISION. 19. BY WAY OF A REFERENCE, WE MAY NOTICE THAT THE T RIBUNAL ALSO IN CASE OF THIS VERY ASSESSEE IN CASE OF ALABRA SHIPPING PTE L TD. V. INCOME-TAX OFFICER INTERNATIONAL TAXATION, GANDHIDHAM, REPORTED IN 6 2 TAXMANN.COM 185 HAS TAKEN A SOMEWHAT SIMILAR VIEW BY OBSERVING AS U NDER: '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 STAT E) 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 I NCOME; 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 EVENTUA LLY SUBJECT MATTER OF TAXATION IN THE SOURCE COUNTRY. THIS IS ALL THE MORE RELEVAN T FOR THE REASON THAT IN A SITUATION IN WHICH TERRITORIAL METHOD OF TAXATION I S FOLLOWED BY A TAX JURISDICTION AND THE TAXABILITY FOR INCOME FROM ACTIVITIES CARRI ED OUT OUTSIDE THE HOME JURISDICTION IS RESTRICTED TO THE INCOME REPATRIATE D TO SUCH TAX JURISDICTION, AS IN THE CASE OF SINGAPORE, THE TREATY PROTECTION MUST R EMAIN CONFINED TO THE AMOUNT WHICH IS ACTUALLY SUBJECTED TO TAX. ANY OTHER APPRO ACH COULD RESULT IN A SITUATION IN WHICH AN INCOME, WHICH IS NOT SUBJECT MATTER OF TAXATION IN THE RESIDENCE JURISDICTION, WILL ANYWAY BE AVAILABLE FOR TREATY P ROTECTION IN THE SOURCE COUNTRY. IT IS IN THIS BACKGROUND THAT THE SCOPE OF LOB PROV ISION IN ARTICLE 24 NEEDS TO BE APPRECIATED.' 20. UNDER THE CIRCUMSTANCES, IN OUR OPINION, ASSESS ING OFFICER AND THE COMMISSIONER COMMITTED SERIOUS ERROR IN PASSING THE IMPUGNED ORDERS. BEFORE CLOSING, WE MAY BRIEFLY TOUCH ON ONE MORE AS PECT SOUGHT 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 I NCOME IS EXEMPT FROM PAYMENT OF TAX, THE REVENUE DESIRED TO IMPOSE TAX I N 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 WA S HELD THAT THE M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 7 - : ASSESSEE, A UAE BASED SHIPPING COMPANY, WHOSE INCOM E 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. 21. WE MAY NOTICE THAT A SOMEWHAT SIMILAR ISSUE CAM E UP BEFORE THIS COURT IN CASE OF DIRECTOR OF INCOME-TAX (INTERNATIO NAL TAXATION) V. VENKATESH KARRIER LTD. REPORTED IN 349 ITR 124, IN WHICH THE COURT OBSERVED AS UNDER: 10. AFTER TAKING INTO CONSIDERATION THE ABOVE CIRC ULARS ISSUED BY THE BOARD AND ALSO THE PROVISIONS CONTAINED IN ARTICLE 8 OF THE D TAA, WE FIND THAT BOTH THE TRIBUNAL BELOW AND THE CIT [APPEALS] RIGHTLY HELD T HAT IN SUCH A SITUATION, THE OWNER OF THE SHIP BEING ADMITTEDLY A RESIDENT OF UA E, THERE WAS NO SCOPE OF TAXING THE INCOME OF THE SHIP IN ANY OF THE PORTS I N INDIA. THE AGREEMENT BETWEEN THE TWO COUNTRIES HAS OUSTED THE JURISDICTI ON OF THE TAXING OFFICERS IN INDIA TO TAX THE PROFITS DERIVED BY THE ENTERPRISE ONCE IT IS FOUND THAT THE SHIP BELONGS TO A RESIDENT OF THE OTHER CONTRACTING COUN TRY AND SUCH POSITION HAS ALSO BEEN CLARIFIED BY THE CIRCULARS ISSUED BY THE BOARD AS INDICATED ABOVE.' 5.2. THE AFORESAID JUDGMENT OF THE GUJARAT HIGH COURT C LEARLY CLINCHES THE ISSUE IN FAVOUR OF ASSESSEE, AS THE HON' BLE HIGH COURT HAS CATEGORICALLY HELD THAT THE SHIPPING COMPANY IS NOT TAXABLE IN SINGAPORE ON THE BASIS OF REMITTANCE, BUT ON ACCRUAL BA SIS AND THEREFORE, PARA-1 OF ARTICLE 24 WOULD NOT BE APPLICABL E. HON'BLE COURT HAS RELIED UPON THE CONFIRMATION LETTER/CERTIFICATE ISSUED BY THE IRAS, WHICH CONFIRMS THE TAXABILITY OF GLOBAL SHIP PING INCOME IN SINGAPORE ON ACCRUAL BASIS. THE COURT ALSO REFE RRED TO THE RAJKOT BENCH OF THE TRIBUNAL IN THE CASE OF ALABRA S HIPPING PTE LTD., (SUPRA) WHICH ALSO LAYS DOWN THE SAME PROPOSITI ON. THUS, THE CONCLUSION AND FINDINGS OF THE LD.CIT(A) STANDS NEGA TED BY THESE DECISIONS AND THEREFORE, THE ORDER OF THE CIT(A) IS T O BE REJECTED. IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE HIGH COURT, REL IANCE ON THE DECISION OF THE DIT(IT) VS. THORESEN CHARTERING SING APORE (PTE.) LTD., BY THE AO AND CIT(A) IS NOT CORRECT, AS THE PRINC IPLES LAID DOWN THERE IN NO LONGER HOLDS GOOD. M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 8 - : 6. THE ISSUE ALSO CAN BE LOOKED INTO IN ANOTHER ANG LE. WHETHER THE PROVISIONS OF ARTICLE 24 WILL APPLY WHEN THE SHIPP ING INCOME IS TAXED IN THE OTHER CONTRACTING STATE EXCLUSIVELY BY ARTICLE 8. THIS ISSUE IS ANALYSED AND CONSIDERED BY THE CO-ORDINATE B ENCH IN THE CASE OF APL CO. PTE LTD., VS. ADIT(IT)-1(1), MUMBAI I N ITA NO. 4435/MUM/2013 DT. 16-02-2017, WHEREIN VIDE PARA 12, THE ISSUE HAS BEEN ANALYSED AS UNDER: 12. THERE IS ANOTHER ANGLE TO INTERPRET ARTICLE 24 , WHICH IS THAT, THE SAID ARTICLE PURPORTS TO EXCLUDE TAX EXEMPTION IN I NDIA IF THE INCOME IS NOT REMITTED OR RECEIVED IN SINGAPORE FOR TAXATION PURP OSE ON THE PREMISE THAT THIS IS A FOREIGN INCOME TO SINGAPORE. FIRST OF ALL , IT HAS TO BE SEEN WHETHER SHIPPING INCOME IS EXEMPT FROM TAX IN INDIA AND; SE CONDLY, WHETHER THE SHIPPING INCOME IS FOREIGN INCOME TO SINGAPORE WHIC H WOULD THEN BE TAXABLE UPON RECEIPT OR REMITTANCE TO SINGAPORE. TH E SHIPPING INCOME IS DEALT WITH UNDER ARTICLE 8, WHICH STATES THAT 'PROF ITS DERIVED BY AN ENTERPRISE OF A CONTRACTING STATE FROM THE OPERATIO N OF SHIPS ....................................... IN INTERNAT IONAL TRAFFIC SHALL BE TAXABLE ONLY IN THAT STATE, I.E., RESIDENT STATE.' THE WORD 'ONLY' DEBARS THE OTHER CONTRACTING STATE TO TAX THE SHIPPING INCOME, THAT IS, INDIA IS PRECLUDED FROM TAXING THE SHIPPING INCOME EVEN IF IT IS SOURC ED FROM INDIA. AN ENTERPRISE WHICH IS TAX-RESIDENT OF SINGAPORE IS LI ABLE FOR TAXATION ON ITS SHIPPING INCOME ONLY IN SINGAPORE AND NOT IN INDIA. WHENCE INDIA DOES NOT HAVE ANY TAXATION RIGHT ON A SHIPPING INCOME OF NON- RESIDENT ENTITY, WHICH IS EXCLUSIVE DOMAIN OF THE RESIDENT STATE, TH ERE IS NO QUESTION OF ANY KIND OF EXEMPTION OR REDUCED RATE OF TAXATION IN TH E SOURCE STATE. IT ONLY ENVISAGES TERRITORIAL AND JURISDICTIONAL RIGHTS FOR TAXING THE INCOME AND INDIA HAS NO JURISDICTION FOR ANY TAXING RIGHT WHIC H ARE GOVERNED BY ARTICLE 8. THERE IS NO STIPULATION ABOUT EXEMPTION UNDER AR TICLE 8 OF THE SHIPPING INCOME WHICH AS POINTED OUT BY LD. SENIOR COUNSEL H AS BEEN SPECIFICALLY PROVIDED IN SOME OF THE ARTICLES LIKE ARTICLE 20, 2 1 & 22. HENCE, IT CANNOT BE RECKONED THAT SHIPPING INCOME EARNED FROM INDIA IS TO BE TREATED AS EXEMPT FROM TAX OR TAXED AT REDUCED RATE, WHICH IS A CONDITION PRECEDENT FOR APPLICABILITY OF ARTICLE 24, ALBEIT INDIA AT TH E THRESHOLD DOES NOT HAVE THE JURISDICTION TO TAX THE SHIPPING INCOME OF THE NON-RESIDENT ENTITY. THUS, THE CONDITION OF ARTICLE 24 IS NOT SATISFIED IN THE PRESENT CASE FROM THIS ANGLE ALSO. IN CONCLUSION, WE HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DENYING THE BENEFIT OF ARTICLE 8 BY INVOKING THE LI MITATION CLAUSE OF ARTICLE 24 OF INDIA- SINGAPORE DTAA AS PER OUR DISCUSSION A BOVE AND MOST IMPORTANT, NOW THIS ISSUE STANDS SQUARELY COVERED B Y THE DECISION OF HON'BLE GUJARAT HIGH COURT AS REFERRED ABOVE. IN TH E LIGHT OF OUR AFORESAID FINDING, WE DO NOT DEEM FIT TO ENTER INTO THE SEMAN TICS OF OTHER FINDINGS OF LD. CIT (A) LIKE NEXUS BETWEEN REMITTANCE OF FREIGH T COLLECTED IN INDIA AND M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 9 - : FINALLY TO SINGAPORE VARIOUS AND OTHER ASPECTS RAIS ED BY HER AND ALSO THE VARIOUS ARGUMENTS AS RAISED BY LD. SR. COUNSEL AND LD. CIT-DR QUA THE ISSUE OF ARTICLE 24. 6.1. IN VIEW OF THE CLEAR FINDINGS ON THE ISSUE, I AM TO HOLD THAT THE AO/ LD.CIT(A) WAS NOT JUSTIFIED IN DENYING THE BE NEFIT OF ARTICLE 8 BY INVOKING THE LIMITATION CLAUSE OF ARTICLE 24 OF I NDIA SINGAPORE DTAA. SINCE THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE GUJARAT HIGH COURT AS REFERRE D ABOVE, I AM OF THE FIRM OPINION THAT THE EXERCISE UNDERTAKEN BY THE AO AND CIT(A) IN CORRELATING THE REMITTANCES AND DENYING THE C ERTIFICATE ISSUED BY THE GOVERNMENT AUTHORITY OF SINGAPORE IS NOT PROPER AND CAN FURTHER HOLD THAT THEY HAVE NO JURISDICTION TO ENQUI RE INTO THOSE MATTERS, ONCE ARTICLE 8 IS INVOKED. THE SHIPPIN G INCOME IS TO BE EXCLUSIVELY TAXED BY THE OTHER CONTRACTING STATE ONCE THE RESIDENCE OF THE SHIP IS ESTABLISHED. SINCE THERE IS NO DISPUTE WITH REFERENCE TO RESIDENCE OF THE SHIP BEING THAT OF SINGA PORE, THE JURISDICTION TO TAX THE REMITTANCES SPECIFIED THEREIN UNDE R ARTICLE 8 LIES EXCLUSIVELY WITH SINGAPORE. IN VIEW OF THAT, TH E ORDERS OF THE AO AND CIT(A) ARE SET ASIDE AND THEY ARE DIRECTED TO ALLOW THE BENEFIT OF ARTICLE 8 TO ALL THE VOYAGES INVOLVED IN AL L THESE APPEALS. 7. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH JUNE, 2017 TNMM M/S. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY M/S. SAMSARA SHIPPING (P) LTD., :- 10 -: COPY TO : 1. FAR SHIPPING (SINGAPORE) PTE. LTD., REP. BY SAMS ARA SHIPPING (P) LTD., 101/102, TECHNOPOLIS KNOWLEDGE P ARK, 1 ST FLOOR, MAHAKALI, CAVES ROAD, CHAKALA, ANDHERI (E), MUMBAI. 2. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, NELLORE. 3. COMMISSIONER OF INCOME TAX(APPEALS)-10, HYDERABA D. 4. THE COMMISSIONER OF INCOME TAX(IT & TP), HYDERAB AD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.